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Keepin' It Real Estate: Where Have All the Houses Gone?

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Getting to the "bottom" of the housing market.

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Where have all the flowers gone, long time passing?
Where have all the flowers gone, long time ago?
When will they ever learn, when will they ever learn?

-Pete Seeger

There's an odd refrain cropping up in some of the nation's most troubled housing markets -- those where real estate professionals can't help but raise their pom-poms in unison and declare this "the best buying opportunity, maybe ever."

Here's how it goes: Where have all the houses gone?

For months, buyers have been told the time to buy is now, what with interest rates at all-time lows, prices down in some markets more than 50%, and generous tax credits for first-time home buyers. These factors -- along with aggressive advertising by the National Association of Realtors -- have driven up demand, even as prices have continued to fall. Supply, meanwhile, has been severely limited for the past 6 months by foreclosure moratoria that were enacted at the end of 2008.

And as tends to happen when demand outweighs supply, many homes have been selling above their list prices as multiple-offer scenarios led agents around the country to wax lyrical about the boom days of yesteryear.

This cursory analysis of the nation's housing market -- while sufficient for the financial punditry complex, which is eager to call a bottom (again), and certain real-estate agents looking to make a quick sale -- is woefully inadequate for any buyer interested in buying an actual home rather than a data point.

Take these 2 California markets for example -- a pair that couldn't be more different if one were located on the moon:

Bakersfield, a Central Valley farming and oil town best known for jockeying with Fresno for the right to be called "the armpit of California," was besieged by the housing-market crash early on.

Subprime lending flourished here during the boom, as home builders like Lennar (LEN), Centex (CTX), and DR Horton (DHI) showered once-quaint communities with sprawling suburban developments. The town made national press for one of the worst real estate markets in the country -- prices have fallen an astounding 48% since just last year.
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