Modesto epitomized the housing bubble and bust: Prices tripled between early 2000 and late 2005, then sank. They appear to have finally reached a bottom earlier this year.
The economy overall in the area is slowly coming back. Farms, which dominate the surrounding landscape, are still relatively rich. Unemployment has fallen over the past year, but still stands at a brutal 13.5%.
That, combined with overbuilding during the boom and a steady flow of bank repossessions during the bust (the area is regularly in the top 10 for foreclosure filings), has kept home prices depressed. It's a tough situation for sellers, but good for bargain-seeking house hunters.