Home sales in Salem, Ore., have fallen along with the economy

— -- It's hard to feel good about a 10.8% drop in home prices. But real estate officials in Salem, Ore., can at least take some solace that home prices there have held up better than the rest of the state.

Economic worries have dragged down sales in Salem for sure — 33.2% lower in March 2009 than the same month a year prior.

But because Salem is the state capital and the county seat of Marion County, it is insulated from major job losses, which has buffered its housing market a little.

"We have a lot of government employment, and that has been somewhat more stable than employment in other industries," says Ray Burstedt, president of SEDCOR, a non-profit economic development corporation. "Our economy is also very diversified."

Salem is home to agricultural producers and food product manufacturers. "They have been working at full capacity, and that also has helped us considerably," Burstedt says.

But that doesn't mean that workers aren't anxious about their futures. "The economy is causing a lot of apprehension among home buyers," says Don Meyer, president-elect of the Salem Association of Realtors.

The housing market has other problems.

One of its markets has disappeared. Until the housing market crashed in California, many people who lived there were selling their homes and moving to Salem for less costly but lovely retirement homes.

When California prices fell, homeowners couldn't cash out of their homes. Salem suddenly had too many high-end retirement homes.

At the same time, many local home buyers are waiting.

"They are thinking that everybody is in trouble, and so they are waiting for prices to go down," Meyer says.

The waiting may be paying off, as more-affordable homes are coming into the market, and starting to sell. High-end homes are not selling, but homes for $200,000 have a lot of activity, Meyer says.

The housing industry hopes that sales have finally hit bottom. "We are probably going to bounce along for another month or two, but we are seeing some recovery even now," Burstedt says.