Bright Spots in California

Three of the top 10 markets for rising prices are in California, a state at the heart of the real estate boom and bust. But because markets in that state were inflated earlier, many were well positioned to make a comeback even before the larger economy recovered.

That's true in the cities of Sunnyvale (in Silicon Valley), Poway and affluent Arcadia, outside of Los Angeles, where prices increased an average of 28%. Inventory has dropped in these markets, suggesting demand is up, and prices in California rose overall from January 2009 to August 2009. That's a natural seasonal trend for healthy markets, but it hadn't been reflected in California since the bust