When homes get too pricey, homebuyers start looking elsewhere. At least, that's the theory behind what National Association of Realtors' chief economist David Lereah calls the "rolling boom." Housing booms create higher prices, and when homebuyers find housing too expensive, they start looking for the next, best alternative -- across the road, across the desert, or across the country.

According to a recent poll of 600 Bay Area residents in California, 40 percent said they have seriously considered moving out of the region, and of those thinking of a move, 70 percent say that the high cost of housing is a major factor driving them.

Affordable housing is an issue, where three-quarters of Bay Area residents say it is important to the overall health of the economy, yet only five percent think their own city is doing an excellent job encouraging affordable housing, and nearly two-thirds believe their city is doing a terrible job.

While the Bay Area is a microcosm of high housing costs, California is still one of the most expensive states in the union. The median price of a home was $551,300 in January, up 13.8 percent from a year ago. Yet, sales decreased by 24 percent, which suggests that the California boom may be over. Or is it merely rolling somewhere else?

Sales may be coasting on the coast, but they're roaring uphill in other areas. Here's what the National Association of Realtors has to say.

Existing home sales were down five percent since January, making the fifth consecutive monthly decline in housing. Housing inventories rose to over a five-month supply, the largest since August 1998. That usually signals a deceleration in home prices, but not this time.

Instead of dropping, the median price of housing rose over 11 1/2 percent to $211,000, with the strongest gains in the least expensive areas of the Midwest and South, suggesting Lereah's rolling boom is gathering no moss.

Here's how it shaped up:

In the Midwest, existing home sales dropped nearly 8 percent, nearly 4 percent below January of last year, yet median home prices rose over 12 percent. The median home price today is $167,000.

Home sales in the South rose nearly 3 percent in January 2006, and the median sales price also rose to $178,000, up over 5 percent from January 2005.

Home inventories are up nearly 36 percent from January of 2005, representing over five months supply of inventory on hand. New home inventories are also up by more than 5 percent, says the Census Bureau Monday. That could mean a glut of homes in some regions, but not all.

Sales continued to rise in areas with lower home prices and good job growth, such as Idaho, Utah, Texas and the Carolinas, says NAR.

At Realty Times, we don't believe the housing boom is over, but it may be slowing in your area. Now is an excellent time to choose a home with inventories offering you more of a selection than you've been able to have in nearly a decade. If you are planning to buy and hold for the long term, you'll be fine. In fact NAR agrees with projections that housing will reach near-record sales this year.

Published: March 9, 2006

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