OCEANSIDE -- This is supposed to be where the housing recovery is happening.

Yet for Frank Jones, there seems to be nothing but pain ahead in Oceanside's northeast corner known as the Back Gate.

A year ago, he lost his job and his house. Struggling to find work, he has relied on family couches to avoid sleeping in the streets.

At the same time, some analysts say the Back Gate's housing market may be turning around, after suffering a full year of foreclosures ripping through the neighborhood, huge price drops and languishing sales.

That's because buyers have suddenly discovered the neighborhood -- house sales doubled in November compared to a year ago.

"You can already see that we've hit bottom," said Alan Nevin, director of economic research for MarketPointe Realty Advisors, in an interview last month. "So it's really a matter of when we burn off the foreclosures, and we're doing that fairly fast now."

Still, for the people who live here, it feels like the neighborhood keeps getting worse, not better.

Although sales have jumped, the market is dominated by foreclosures and "short sales," or homes listed for less than the amount owed. According to industry data, such distressed properties constitute 85 percent of the 450 houses listed for sale in the 92057 ZIP code, which abuts the "back gate" of Camp Pendleton.

Indeed, other analysts see plenty of signs that the housing market depression could deepen in many communities:

- In areas such as Oceanside and Murrieta, there are more houses in foreclosure than listed for sale, according to data from industry sites ForeclosureRadar and Redfin. This means banks are poised to dump thousands of additional properties onto a weak market.

- Within those cities, some blocks, such as where Jones lives, only foreclosures or short sales are on the market -- meaning that all the neighborhood's home sellers are facing foreclosure.

- And the national meltdown could further stress banks, making mortgage loans harder to get for potential buyers. Banking giant Credit Suisse predicts that 8 million families, or roughly 8 percent of households, will lose their homes across the country over the next five years.

Economic pain has company

The Back Gate is by no means alone. Foreclosures in Southwest Riverside County were 70 percent greater than in North San Diego County, even though Southwest Riverside County's market had fewer houses, according to data from ForeclosureRadar and the U.S. Census.

In Temecula and Murrieta, the markets appear to be suffering the same dynamic as Oceanside's Back Gate, with virtually only foreclosures selling.

And there is yet another major cause of more pain ahead: the jobs market appears to be worsening by the day.

Jones can't find work. Almost 12 months ago, he joined the thousands to be kicked out of their houses. Without a regular paycheck -- he was laid off from his job servicing heating and air conditioning units -- he has been sleeping on his sister's couch.

His wife and their three children live at her sister's place. There's no space for Jones there.

And there is little space for him at his sister's, where every couch is a bed. Facing few jobs and high rent, 11 family members, including Jones, have crammed into the three-bedroom house.

"The more I think about it, the more I think I might have to leave here, the state I was born in, the place I love; because it's so bad here and it's more expensive than everywhere else," Jones said.

Economists say that in a typical recession, job losses precede weakness in the housing market, because people have trouble making mortgage payments and flood the market with homes for sale, driving down prices. This happened in the early 1990s, when major aerospace employers cut jobs and triggered a painful recession in Southern California.

In the latest cycle, housing prices started to fall and foreclosures jumped in 2006. Yet unemployment began to rise just seven months ago.

Unemployment adds to woes

Last month, San Diego County's unemployment rate hit 6.9 percent, and reached 9.5 percent in the Riverside-San Bernardino County region, according to the state's Employment Development Department.

"Now that the recessionary dynamics are as strong as they are, that's going to bring housing demand down even further," said James Hamilton, an economics professor at UC San Diego.

The housing crisis has already wreaked havoc on the Back Gate, a neighborhood of small, 40-year-old houses.

Homeowners say the neighborhood feels quieter -- almost half of the houses on some streets have gone through foreclosure.

Paul Baca, who purchased his house in 1972, said he is bothered by the patches of empty houses and brown lawns that have accompanied rising foreclosures.

There used to be a time when homeowners cared about their properties, he said. And some foreclosed houses have gone to investors who rented the properties to people more concerned about a low water bill than a green lawn.

"As soon as you turn into the neighborhood, you notice it," Baca said. "As soon as you hit the corner, there's vacant houses and brown lawns."

And the foreclosure crisis has hurt local businesses, as well.

Down the street from Baca's corner, a strip mall is dotted with businesses labeled with generic white signs and simple names, such as "Dry Cleaner" and "Big Liquor."

A single rose

Ali Dastgerdi owns one of the stores, tapping into the largely military population with a business name of Semper Fi Florist.

He has owned a floral shop in the area for 15 years. Few times have been this hard, with sales down 35 percent from a year ago, he said.

More sales are with cash and less with credit cards, he said.

"Everyone would buy a dozen roses. Now, all the young people say they can buy just one rose," Dastgerdi said. "Before, you would never see that."

If the foreclosures keep growing and job losses continue to mount, as analysts expect, sales at the local shops will only worsen.

For the homeowners, the Back Gate's housing depression has wiped out 50 percent of home prices, or about $4 billion in equity in the 92057 ZIP code, according to real estate and Census Bureau data. Across the county, homeowners have lost about $176 billion.

For Jones, there doesn't seem to be an end in sight. He said work has been impossible to find, save for a few gigs snagged through online classified advertisements for his specialty. Applications at Wal-Mart and Kmart have gone unanswered, he said.

Until he can find a steady job, his sister's couch will remain his bedroom, and his wife and kids will remain in a different home.

"I hope every day that I can bring myself out of this," Jones said. "I should be able to get out of this. It's stressful when I'm not there, you know."

"Little boys need their dads," he said. "It's not that I'm so much a failure, but that I'm still failing."

Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at bizblogs.nctimes.com.