Some analysts see short selling as a more gentle and cheaper alternative to foreclosure, and the government apparently agrees.

John Burns Real Estate Consulting in Irvine reports that Treasury officials will soon announce a $2,500 subsidy to encourage short sales, which is where lenders agree to sell a house at or near market rate to avoid a costly foreclosure.

More short sales could help stem a projected tsunami of foreclosures that some experts say will hit in 2010.

Burns also projects a "W"-shaped recovery, with the length of the second downward leg dependent upon the amount of government intervention. Without aid, he says, "Home prices will plummet, banks and the GSEs (Government Sponsored Enterprise, such as Fannie Mae) will continue to lose money and the economy has virtually no chance of increasing overall employment in 2010."

Finally, Burns has high marks for Fresno's affordability. Prices have tumbled so far that our housing costs-to-income ratio is 27% - well below the 33% that financial experts say homeowners should not exceed.

Merced's ratio is even better: 22%.