With the holidays behind us and a brand new year underway, Realtors, home sellers and buyers are all wondering what 2011 will bring to the Bay Area housing market. After a choppy 2010 that saw strong activity early in the year and a softening in the second half, Realtors are encouraged that recent improvement in the economy could bode well for the housing market.

The real estate market is so closely aligned with the fate of the overall economy, the stock market and consumer confidence. In general, all three of those economic indicators have been recovering in recent weeks. And this week in particular gave housing market professionals reason for encouragement.

In his first appearance before the new Congress, Fed Chairman Ben Bernanke gave a more upbeat assessment of the economy than he has in the past.

At the same time, the financial markets have rallied in recent months.  The S&P 500 and the NASDAQ have risen 10% and 12%, respectively, over the past three months. Many Silicon Valley companies continue to report strong sales and profits over the past year. All of this undoubtedly is having a positive impact on consumer confidence.

Finally, this past year's holiday season provided some welcome news for retailers. U.S. retailers posted the strongest revenue growth since 2006. A Thomson-Reuters index of 28 leading retailers showed sales rose 3.1% at stores open less than a year.

Nonetheless, despite two steps forward and one back, the overall economy appears to be trending upward. We're cautiously optimistic the same will be true for our housing market in 2011.