“There is still bad news, but the bad news is getting better”
The National Association of Realtors is usually too optimistic but this assessment of the U.S. real estate market seems about right.

1. Nonboom stallers. These cities, such as Detroit and Akron, Ohio, never participated in the real estate boom of this decade and remain stagnant because of local economic issues. These cities represent about 10% of the U.S. real estate market.

2. Nonboom gainers. Areas such as Houston and Dallas also did not participate in the great run-up in prices, and today are showing respectable gains in home prices despite the national numbers. These areas account for about 23% of the market.

3. Boom lite. These cities, of which Atlanta is representative, took part in the boom to some extent and are seeing home-price gains decelerate but not turn negative. About 22% of the U.S. is covered.

4. Average boom. Cities such as New York enjoyed a solid run and have seen some modest price drops this year. But in these areas, which represent about 19% of the country, the correction is almost over.

5. Hot boom. These are the now-famous places where prices soared, investors salivated, speculators jumped in and the party, which seemed like it would never end, has come to a crashing conclusion. These places — California, Arizona, Nevada, southern Florida and the Washington, D.C. area — face the biggest correction and the longest recovery period.

Here is a good point to remember.

Despite monthly numbers showing year-over-year home prices declining 2.2%, Lereah said that nationally home prices will still rise 1.6% overall in 2006 and they are projected to increase 1.5% in 2007.

Those are national numbers but it’s good to remember that for Greater Phoenix the overall 2006 median home price is going to be higher than in 2005 despite the declines seen when looking at recent monthly year-over-year median prices.