During a volatile housing market, it is important to remember that everything is relative and everything is cyclical, that is, wait long enough and housing history will repeat itself.

In that regard, housing is just like any other economic force. When, for example, the stock market plunged in 2008-09, there were many pundits who predicted that the new normal for the stock index would be below 10,000 points, or about 3,000 points below its record high.

Today, stocks are trading around 12,300 and rising.

Housing is reacting accordingly and often contrary to conventional wisdom. Conventional wisdom says that the housing market is still soft and that buyers are hammering sellers for deep discounts and other concessions.

But a look around the country shows the opposite. In Massachusetts last year, homes priced at more than a million dollars rose in sales by 28%, according to an analysis published in the Boston Herald newspaper this month. And while the expensive digs sold, sales for the rest of the units at less than a million dollars fell by 1.6%.

In a pricey area of Tampa Bay, Fla., sales of million-dollar-plus homes are up 22% in three key counties, according to the Pinellas Real Estate Organization.

The sales increases in both areas are attributed to reduced asking prices, pent-up demand and, most importantly, a realization by the people with the means to buy these luxury homes that the sky has not fallen, that the economy is stabilizing and that their future is more secure.

Sales of expensive homes are a key indicator, but not the only one worth examining. According to the National Assn. of Realtors, 78 markets in the U.S. experienced price gains in the fourth quarter of 2010 over the previous year. Existing-home sales were up as well, rising 15.4% to an annual rate of 4.8 million from 4.16 million in the third quarter of 2010.

Here in Orange County, sales for homes priced at more than $1 million in 2010 were up 25.7% over 2009, according to Dataquick Information Systems. Orange County was not alone in such increases. All but one of the surrounding counties in Southern California experienced double-digit increases in million-dollar home sales, the lone exception being San Bernardino county, which showed a 10.6% drop, according to Dataquick. Statewide, Dataquick numbers show an increase of 21% for expensive homes, rivaling that of Massachusetts.

Right now, the hottest part of Orange County is along the beach, though that should not surprise anyone as beach zip codes have usually fared better than inland properties.

Again according to Dataquick numbers for January 2011, Orange County's beach cities home sales increased 18% over a year ago, though the median price dropped 6.8% in the same period. For sellers of these homes, a 6.8% discount is usually something they can live with.

And here is your Orange County context: Overall, sales in the county were up 3% over a year ago and the median selling price was down just 2%. Both numbers indicate positive trends.

But wait, there's more. An important indicator of the housing market is new home sales. When developers are confident, they build homes. As of late, new home construction hasn't exactly been headline news.

In Irvine, however, the first phase of a planned 2,000 new units has just been announced. These first 650 homes will range in price from the mid-$300,000 to almost $800,000.

Home buyers and sellers in Orange County have reasons to be optimistic, and as long as the perfect storm of low mortgage interest rates and reasonable prices continues, there is every reason to believe that the housing market will pay great dividends beyond just the sales.

STEVE SMITH is a Costa Mesa resident and a freelance writer. Send story ideas to smi161@aol.com.