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That is what the experts are projecting. The inventory bump in California will not be nearly as disruptive to pricing of homes as the economic decline in the rust belt states is to housing costs and foreclosures. The San Francisco – Oakland region is in for a soft landing as job growth and wage inflation are keeping the incredible rise in housing costs affordable.

Some cities in California are also more likely to see home-price declines because of the significant run-up in home prices during the boom, but the analysts point out that the Bay area, namely San Francisco and Oakland, is actually experiencing less risk of a price decline because of rising income growth and fewer job losses in that area. Nationwide, Credit Suisse analysts believe that barring an economic disruption, the current housing-market slowdown will become “an orderly soft landing.”WSJ

However the midwest has seen a tremendous loss of jobs and business. This economic downturn is forcing many into bankruptcy and foreclosure. The lack of jobs in these areas are not bringing in new buyers so there is barely any market for housing. With no flow, the opportunity to get out of a bad mortgage is nearly impossible for the struggling borrower.

A recent report by the Office of Federal Housing Enterprise Oversight looked at housing prices in 275 metropolitan areas across the country. Six of the seven metropolitan areas that showed housing-price declines for the 12 months ended June 30 were in Indiana and Michigan. The study also stated that housing prices in states like Indiana, Ohio and Michigan were fairly flat over the past year but actually declined in the second quarter.

The decline in price appreciation threatens to pinch Midwest homeowners in an already difficult economic position. “In a rising unemployment situation, as experienced by some Midwest states,” says Damien Weldon, director of collateral-risk analytics at First American LoanPerformance, “a lack of significant home-price appreciation can limit homeowners’ ability to tap into their home’s equity by refinancing their mortgages or taking out a home equity line of credit.”

He adds, “The safety cushion a large amount of home equity provides simply doesn’t exist for many people in that region.”

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