The answer to the bottom of the housing market question depends on where the home is located.  Location in this sense is not referring to the old real estate joke of the three most important factors to consider when buying a home—location, location, location—but rather the economic viability of the community in which the home is located.  It might be said that the new answer to the three most important considerations in buying a home is jobs, jobs, jobs.

Housing values have been retained much better in areas with low unemployment rates.  Areas with recession-immune employers such as the major college towns of Cambridge, Massachusetts and West Los Angeles, California have suffered very little decreases in home values.

The state of North Carolina has a higher unemployment rate than the national average except for pockets of communities within the state like Jacksonville, where home values are off their peak by a mere 0.1 percent.  Jacksonville has the economic advantage of being the home to the Marine Corps Camp Lejeune and the New River Air Station.  Durham, North Carolina is blessed with plentiful universities, state and federal government offices as well as many nonprofit and corporate research facilities.

Another test of home values in a region is the price of rent.  Rental prices for this value indicator do not mean whether the rents are low or high but whether the area has low or high price-to-rent multiples.  To clarify this point, consider the rent vs. buy calculators found on many real estate websites.  These calculators figure that if home prices are more than 15 times annual rents, the market advantage goes to the renters.  If the calculation puts housing at less than 15 times rents, the edge goes to the buyers.

Be very wary of extremes in the rent vs. buy calculation.  Very low price-to-rent multiples can be a heads-up for a seriously depressed market with a plethora of unsold housing inventory.  At the other end of the spectrum lies New York City, where the rent vs. buy calculation comes out at 39 and home values have not decreased substantially from their peaks.

An obvious indicator of a community’s housing values is the number of foreclosures within it.  Foreclosures lower property values for the entire neighborhood.  Even when times are good for the housing market, the percentage of foreclosed homes in the area lower property values considerably.  Imagine the effect on a metropolitan area glutted with shuttered, foreclosed residential and commercial properties.

Many people who should know better have predicted the year in which housing values finally bottom out.  These “experts” fail to comprehend the difference between seasonal improvement and actual improvement in housing markets.  Home sales always increase when weather is mild.  The truth is no financial or real estate professional has accurately predicted the period of the housing market bottoming in the past seven years.

The answer, then, to whether the housing market is at the bottom depends very much on the economic circumstances of the region where the housing exists.  Nationwide statistics on the housing market are always based on the national average and are not an indicator for a specific region.

In retrospect, it may be that the boom and bust cycle of the housing market is a thing of the past, and that house prices will rise and fall with inflation as with any commodity.  Today, purchasing a home must no longer be considered an investment but simply a suitable place to live.  This rational concept is undoubtedly a result of the severe financial pain affecting many homeowners during the past eight or so years along with the banks and home lenders who vastly overextended credit to non-creditworthy homebuyers.  This practice caused mayhem in the banking industry, closing many of them and forcing the ones who remain to be much more cautious in their lending practices.