Are you looking at home prices as aggregate? It will naturally seem a lot more stable then since you are then looking at what you'd have if you had diversification! As for individual cases of housing, I think we've recently seen enough discussion of CA volatility to conclude that at least big cities have a lot of volatility in individual housing units.

(Of course this all depends on the alternative too: renting regulations vary widely over the world in how strong the position of the occupants is wrt rent increases and landlord initiated termination)