Here's a perspective that we don't get that often: The inside real estate forecasts of some of the top executives of America's biggest banks.

Speaking at a private financial conference in London last week, the bankers were moderately upbeat about where we're headed in housing and mortgages.

Howard Atkins, chief financial officer of Wells Fargo, was quoted in the American Banker newspaper as saying that lower mortgage rates -- the latest 30-year average dropped below 6 percent again last week -- plus more affordable housing, and banks newly strengthened by capital infusions, should trigger a recovery this year.

Kerry Killinger, CEO of Washington Mutual, said his company is seeing "a slight improvement over the last month or so" in California -- the single largest and hardest hit segment of the U.S. housing market.

"There's (been) some pickup in demand," Killinger said. "(We're) watching this very closely (because) this may be indicating a troughing of conditions."

That means that maybe -- just maybe -- the protracted real estate plunge in California is showing hints of finally flattening out.

You couldn't find much evidence of a California turnaround in the latest federal pricing data, however. In its quarterly report issued last week, the Office of Federal Housing Enterprise Oversight -- the agency that tracks home values for the federal government -- found a 4.4 percent decline in California for the first three months of 2008.

So if the bankers are picking up even the faintest signs of improvement in loan applications in the second quarter, that could be important.

The new federal report also offered some remarkably positive news: Despite all the dire headlines about the drop in real estate prices, 56 percent of the 292 metropolitan areas surveyed nationwide showed net price appreciation for the past year.

You might also be surprised at the latest list of best-performing markets.

Tops for the past 12 months: Houma-Bayou, Louisiana, where the average house gained by 11.2 percent; Grand Junction, Colorado -- up by 9.1 percent; Wenatchee, Washington, 8.1 percent; Austin, Texas, 7.7 percent, Billings, Montana, 7.1 percent.

The entire state of Wyoming saw average 6.3 percent appreciation in the last 12 months. Utah 5.6 percent, Montana 4.9 percent, Texas 4.7 percent.

Bottom line here: Real estate is -- and always has been - a uniquely localized asset. The healthiest markets today never boomed. They never bust. They just plodded along during the boom years turning out annual gains of three and four percent while California and Florida were out of control at 25 percent a year.

"Slow and steady" wasn't popular in 2003 and 2004. But it looks pretty good right now in comparison.

Published: May 29, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.