[1967 R50/2]

People expecting a real estate "bust" are likely to be dissappointed. More likely appreciation will halt or slightly withdraw with minimal appreciation or some depreciation over the next decade or so. That is the nature of real estate. Not the sudden boom or crash that one can see in the stock market.

True, housing is being built at a rate greater than the growth rate of new US households, however:

1. Foreign money is keeping long term rates low and will likely keep them low unless the rest of the world develops some real accounting standards. So no matter how much Greenspan moves the short term rate, long term rates will stay low (barring some crisis) and this makes home buying attractive.

2. The real estate legislation signed in 1997 allows you to take up to $250K in appreciation tax free on real estate sales provided it has been your primary residence and you have been there for more than 2 years. This is a tax advantage that no other form of investment can beat. Unless the gov steps up to the plate and taxes the appreciation on the same level as stocks or lowers the capital gains tax on stock to match real estate, expect the speculation to continue.