Jeff Harding makes an excellent point. What we heard yesterday proves our housing market is years from the bottom, and those of us who keep saying, OK, this is it, are continually blown away by the sweeps of foreclosures and short sales that are coming on the market. Those are watering down prices and will for years. Yes, years. I agree with everything Jeff says but want to make three points.

One, if you are a cash buyer, really start paying attention.

Two, real estate is a LOCAL story. Prices are down but sales are up in Dallas, particularly higher end sales. Wall Street ain’t hurtin’. If Washington would at least pretend to care about housing, I think we’d see a psychological attitude reversal.

Third, if you are seeking financing, it’s almost now or never. Really, once the government backs out of the GSE’s mortgage life is going to be very different and very expensive. If they mess with the home mortgage deduction, God help us all. What he says is similar to what I was saying last week — who cares how cheap homes are in some communities, what are the chances those places are going to be recovering any time soon? Where are foreigners buying? Where are rich people sending their kids to college? Where are people with money buying second homes?

Las Vegas? No. South Florida? Maybe with retiring Baby Boomers plus foreign money seeking cheap deals in the Sunbelt. Location is everything as they say. If the supply was more than 12 months, I would be cautious. I would make sure in really overbuilt areas I was buying the best property location and amenities on that market.  Cheap is sometimes, just, well, cheap. Be concerned about property tax increases as states look for sources of revenue. As you know, there is no substitute for good due diligence and market research.

You don’t just want cheap. You want solid. I love Texas, but worried, based on what happened here last year, we are heading to “Taxas”. I agree I’d buy in certain coastal areas because they are not making any more of it, but there are always disasters — hurricanes, oil spills. We can look at the Gulf oil spill to gauge how quickly the area has recovered.

And know what other state has been on my radar for investment? Arkansas. Stay tuned.