Real estate, real estate, real estate. Location, location, location. Sacramento, according to this month's Fortune Magazine, is a Dead Zone. One of seven Dead Zones, Fortune is projecting the price of a home in Sacramento will decline this year. Other dead zones are Boston, Las Vegas, Miami, Washington D.C., Phoenix, and San Diego.

What's going on in the California real estate market? Affordability is the key issue. The medium priced home is $561,000. On average, it takes a $134,000 salary to qualify for the medium priced home. How many people in California make this kind of money? Not many.

My own barometer - Bob Shallit of the Sacramento Bee. For the past six months, Bob's column has been full of real estate stories. This no doubt is a strong signal that the local real estate market is poised for a downturn. How big of a downturn are we looking at? My research shows that in the early-nineties, the Sacramento region endured six years of declining prices. If you bought a house in 1990, prices tumbled and it was not until 2000, ten years later, that the medium price of a home in Sacramento returned to the 1990 levels.

Sacramento buyers beware! Prices could fall 5 to 10 percent. And if they do, be prepared for a long recovery. Two nice things though about real estate. Over the long term, Sacramento real estate is a great investment. Also, you can buy real estate just about anywhere. Fortune Magazine suggests seven U.S. cities are safe investments right now, with projections of 3 to 7 percent annual appreciation over the next few years - Cleveland, Columbus, Kansas City, Omaha, Ptitsburgh, Houston, and Dallas.

One of our friends bought a rental triplex in Cleveland last year and is enjoying a nice positive cash flow. We just bought a house in Dallas and will be looking for other Dallas area investments.

Pierre Cutler
The Sacramento Executive