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[Gene GeRue <genegerue AT ruralize.com>]

> If indeed there were the bursting of a bubble under way, would not 
> the real estate market be at a state of equalibrium at some point on 
> its way to crash. . . . I didn't see anything in the article that 
> addressed that or gave any evidence that the "balance" was anything 
> but a passing phase.

Good point. Had you gone to the url posted you would have found in 
another article that in fact the majority of real estate lenders feel 
that prices will soon face ten to twenty percent lowering 
adjustments. This was offered as proof of the so-called bubble 
bursting. By my standards, that decrease is not a crash but a common 
adjustment. But I understand that my standards are not common with 
the hysterical media or with those who strive to justify contrarian decisions.

James, it occurs to me that my view of real estate cycles is similar 
to your view of what others call global warming. The climate may in 
fact be simply doing what it has always done, cycle. So, too, real 
estate prices surge and wane cyclically. I don't see bubbles, I see 
normal business cycles.

> Not only that, many analysts have said that the 'borrow on the
> equity/speculate in real estate' phenomenon can only continue as 
> long as prices and demand *continue* to rise.  "Balance" means the 
> rise is over.

Borrowing too much against one's home is an additional issue. There 
are many among us who commonly make foolish financial decisions. In 
the case of cashing in on high home equity, lenders are happy to 
oblige. As they sell the loans, the risk is transferred to investors 
who accept the return versus the potential for foreclosure. Real 
estate securities are generally pretty good investments. I haven't 
seen recent foreclosure percentages but my sense of it is that they 
are currently low.