The key word here is “normal”. As in a “normal” economy? I’ve closely analyzed the last 2 real estate cycles in CA over the last 25 years and the greatest contributing factor is the level of unemployment. I think this holds true for the entire nation. Whether one looks at Dallas, Chicago, Detroit or LA. At about 6.5% and up, the real estate market starts to really tank and doesnt come back until the number goes below 6%. One can certainly argue that states like TX did not see a bubble like much of CA, but that doesnt mean that they are immune from a down-turn due to growing unemployment. In CA we’re seeing a bubble (Liar loans) collapse followed by a recession. So we’ve got a double whammy going on that will cause it to drag out for a while. But other parts of the country arent off the hook just because they didnt have a bubble in their market.
