Jobs are crucial to a sustainable recovery in the housing market. People who are unemployed or fear they might be soon don’t buy homes.

According to the Bureau of Labor Statistics, the seasonally adjusted unemployment rate was 9.8 percent in November 2010, up from 9.3 percent in 2009, though that rate fell to 9.4 percent in December 2010.

About 8 million jobs have been lost during this economic downturn, the biggest job loss since the Great Depression. Only 1 million have been added, according to Ken Rosen, chair of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. Rosen doesn’t believe the job market will fully recover quickly.

Location is vital to determining if a housing market is stabilizing, moving up or continuing to decline. Recent data from online real estate company Zillow, which offers home-price estimates, indicates that U.S. home prices will probably lose value in 2010 compared to 2009. However, four of the largest 20 markets analyzed by the company did not decline in value: Los Angeles, Boston, Riverside (Calif.) and San Diego.

The gateway cities — Boston, New York City, Seattle, San Francisco, Los Angeles and San Diego — are bouncing back, according to Rosen. The Central Valley in California has not yet stabilized. Silicon Valley is doing well with job creation, and home sales have picked up in the area. Washington, D.C., continues to grow.

Rosen expects an uneven recovery and volatility from one quarter to the next. There seems to be consensus that housing recovery will take time. But there is a difference in opinions as to how long the recovery will take.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), expects a modest rebound in home sales in 2011, dependent on an improvement in the labor market. Analysts at Morgan Stanley are not as optimistic. They predict home prices will fall 5 to 10 percent in 2011, followed by flat prices for four years.

Homebuying is dependent on affordability. Recently, buyers have taken advantage of low home prices and low interest rates. During the last two weeks of November and first week and a half of December 2010, interest rates jumped approximately 0.5 percent on fixed-rate mortgages. While still low by historic standards, this does affect how much buyers can afford to pay.

HOUSE HUNTING TIP: Buyers who were prequalified or preapproved for a mortgage before rates jumped should talk to their mortgage representative to find out how this will affect their homebuying power. Also, both buyers and sellers should check to see if higher interest rates are having any impact on local home prices. If your area is bloated with inventory and fewer buyers can afford your home, you may have to make a price accommodation in order to sell.

However, if you’re a buyer looking in a highly desirable low-inventory market, perhaps in a gateway city, you may find that home prices aren’t affected by higher interest rates. You may need to buy a less expensive home.

The news on the economy and the housing market is not all bad. Although home sales were down an unexpected 2.2 percent in October 2010, perhaps due to the end of the homebuyer tax credit closings in September, the National Association of Realtors reported this month that the sales rate for existing homes rose about 12.3 percent from November 2010 to December 2010, while falling 2.9 percent compared to December 2009.

And the group’s latest real estate and economic forecast, anticipates that sales of existing homes, after falling 4.8 percent in 2010, will rise 7.9 percent this year, to 5.3 million, and another 4.5 percent in 2012, to 5.53 million.

The pending sale index, which tracks home-sale transactions that were signed but not yet closed, has risen for three consecutive months, from October 2010 through December 2010.

Consumer sentiment rose to 74.2 in December from 71.6 in November, according to the Thomson Reuters/University of Michigan survey. The U.S. trade deficit was at a two-year low in October. Thanksgiving air travel was up 11 percent over 2009. Pre-Christmas retail sales also increased over a year ago.

THE CLOSING: Focus on location and be prepared for volatility.

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