Signs of a better housing market?

Depends on where you live, M.P. McQueen reports in The Wall Street Journal.

The key to understanding this is that there really isn't one big national market for houses, but rather thousands of smaller markets. What's happening in your state or town or even in parts of your town can differ from what's happening elsewhere.

The national housing market is merely a collection of local markets. And while those markets have moved together to an unusual degree during the past 15 years or so, new data show that the pattern is changing—and that many markets are safer now than they have been in years. 

In the first quarter of 2009, for example, median prices for existing-home sales declined from the previous year in 134 of 152 metropolitan statistical areas, according to the National Association of Realtors. By contrast, in the fourth quarter of 2010, median prices rose in 78 markets, fell in 71, and were unchanged in three.

Local Market Monitor Inc., a real-estate research company that ranks local housing markets, akes repeat-sales prices compiled by the FHA across 315 housing markets and compares them with the "equilibrium prices" that can be sustained by local economic conditions. Then it ranks markets accordingly.

LMM's latest data, released Thursday, suggest the worst of the housing bust is over in most areas. The firm rated just 21 markets as "frankly dangerous" in February, down from 31 in August. It ranked 20 markets as speculative, 259 markets as posing "typical" risks and 15 as suitable for conservative investors, from 37, 222 and 25, respectively, in August.

So it pays to think and act locally. All real estate, like all politics, is local.