Real-Estate Expert Says
Pricing Trends Are Local

Question: I want to buy a home in the San Jose, Calif., area. I've talked with two brokers and both insist that the high prices of homes are justified because prices will go even higher in the near future. This seems to fly in the face of everything I read about the recession. Every day there's a newspaper item about some major corporation laying people off. And look what's happened to the stock market. Are these brokers crazy or do they know something that the rest of us don't?

Pat: The current situation is like the old story about how to determine the difference between a recession and a depression. When your neighbor's out of work, it's a recession. When you're out of work, it's a depression!

Last year the San Jose area experienced residential price appreciation of more than 20%. This was mainly due to demand from Silicon Valley workers and a shortage of new homes. With that background, it's easy to see why brokers in the area see only good times ahead. And they could be right. It's most important to remember that all real estate is local. While Wisconsin may be in the throes of a painful economic downturn, most of California is barely feeling a twinge.

It all depends on how severe the downturn becomes. If it turns into a full-blown national recession, then all parts of the country will be affected, including San Jose, and prices there could stagnate or even decline. However, if things continue more or less as they are, San Jose prices could move upward. The big wildcard in California, of course, is energy prices and the effect they could have on local economies. In one sense, buying a home is like any other investment: You pay your money, and take your chances.

How to Get Money Out of a Home That Won't Sell

Question: My husband inherited real estate in another state about a year ago. We've been working with a real-estate attorney in that city to sell the property. We want to use some of the money from the sale as a down payment to purchase our first home. We'd like to sell it first, but time is of the essence. How can we use the value of the unsold property to secure a mortgage loan? 

-- Sydney, St. Louis

Sydney: There are a slew of ways to quickly get money out of the inherited property without selling it. You can simply refinance or you can get a short-term "bridge" loan. Any good mortgage broker can arrange for these. You can even go to your own bank and get a collateralized personal loan by putting up the property. All of these methods will result in you having to make mortgage payments, but you can offset the payments by temporarily renting out the property.

The biggest problem I can foresee is that the inherited real estate is some distance away. While there is no difficulty in arranging financing from a distance, the logistics of caring for the property -- inspecting, maintaining and renting -- can be troublesome. You're best off selling a distant property as soon as possible. If your current broker/attorney hasn't been able to move it for you in almost a year, it's time to consider going with a different agent.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Tips and Traps When Building Your Own Home," (McGraw-Hill, 2000).

Submit your question about residential real-estate and home-improvement issues to homes.wsj.com. Please include your first name, city and state.

Pat, San Jose, Calif.

Email your comments to rjeditor@dowjones.com.