Don’t shoot the messenger:
Hands-down the strongest-performing market in February was San Francisco, which posted an 11.9% gain over the past 12 months. “California has been strong the last couple of months. There does seem to be something of a serious revival going on,” says Blitzer. One month would be a fluke, but these California metros have been seeing gains over the past several months, he says.
The recovery can in part be attributed to a lack of land. Coastal cities like San Francisco don’t have that much space to build hundreds of homes. From peak to trough, home values in San Francisco fell by some 40%, says Robert Van Order, a professor of real estate and finance at George Washington University’s School of Business. In the long run, you’d expect to see growing values there because it’s an inelastic market. “There’s not much room to build, so it has pretty good prospects,” he says.
–Home Prices Are On the Move [Smart Money]