California "is one of the hottest housing markets in the country," according to Leslie Appleton-Young, chief economist for the California Assn. of Realtors. "It's exceeded all expectations."

In 2005, Appleton-Young thinks home prices will rise about 15%, but that sales in California of new and existing homes will drop about 2.5%.

This rise in home prices is expected to start driving more and more potential buyers out of the real estate market, particularly in high priced areas like Ventura and Orange counties. This trend has; however, pushed up the prices of Los Angeles, Riverside, and San Bernardino counties.

As mortgage rates start going up next year, albeit slowly according to most analysts, even fewer people will have the ability to buy into the California real estate market.

While less houses will be up for sale, home prices are not expected to be adversely affected in 2005.

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JEANNINE AVERSA is reporting "Sales of previously owned homes in November posted their best month on record as low mortgage rates enticed buyers to live the American dream."

Today's report surprised most economists who were expecting flat sales, and hints that maybe the real estate market is much stronger than previously realized.

With high demand, low rates, and a stable economy, the Nation's real estate market is cruising right along, especially in the West.

According to Aversa, 30-year mortgage rates averaged 5.73 percent for the month of November, down 5.93 percent from the same time a year ago.

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According to MBA, applications for home mortgages fell last week as refinancing activity slumped and mortgage rates were little changed.

Fixed 30-year mortgage rates averaged 5.72 percent last week, excluding fees, up 3 basis points from 5.69 percent the prior week.

Click here for the complete CNNMoney article.

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Probably not according to a new article in USA Today by Sue Kirchhoff. In Housing market forecast: Cooler, Kirchhoff notes that next year's housing market might be a bit off last years, "but don't expect homes to become more affordable."

Overall, most think 2004 will be a record year, just not quite as hot as 2005. In fact home prices are expected to continue to appreciate well into next year.

Towards the end of next year, many analysts predict mortgage rates will be between 6.25% - 6.75%.

Some argue this raise in rates will make homes less affordable, especially in places like California, while others argue that an improving economy will offset the difference in rates.

Many analysts are not even mentioning "bubbles" anymore as increased immigration and stringent building codes, coupled with baby boomer wealth, might keep housing prices shooting strongly upwards, barring an economic disaster.

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November home sales were down over 12% Nationwide, as the country saw it's biggest decline in home sales in over a decade.

According to the LATimes.com, economists noted several possible causes, such as concern about increased mortgage rates, and nasty weather in many parts of the country.

Nonetheless, Southern California home sales are at almost the same pace as last year. Additionally, late November and early December mortgage applications were reportedly higher than expected.

Still, while there are many buyers in the Southern California home market, they are taking their time and they have a lot more choices. With area home prices up 24% over last year, most buyers are not rushing into home purchases right now.

Many buyers; however, analysts note, don't like the current high prices of California homes, but they also realize that today's low rates might be a once-in-a-lifetime event.

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A recent Business Week article by Peter Coy Protecting Yourself From a Housing Slump loosely reports that this is the year that housing prices hit their peak.

At that point double gains in home appreciation will slow, flatten, or recede. Depending on numerous factors, different areas and neighborhoods are predicted to be affected in various ways, with some continuing to gain value as others lose value.

Therefore, the article makes several suggestions that mostly focus on finances. Most notably, limit and reduce all debt now. The paper money gains of the current housing bubble can quickly be lost. Now is the time for fiscal responsibility.

If you want to sell, you should be ready to move quickly this spring.

If you are are looking to buy in Los Angeles, Southern California, or California, now might not be a bad time to wait.

Nonetheless, the most certain thing in the Los Angeles real estate market market is uncertainty.

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According to the LATimes.com the typical California wage earner must make about $44,000 a year to afford the rent on a two-bedroom home.

Locally, Ventura County was the state and nation's fourth least affordable county, while Orange County was number 6.

Los Angeles county was not in the top 10, but the economics of the real estate market look good for Los Angeles County. With construction slowing and demand for rentals increasing, vacancies are very low. Not only might this force rents higher, but it might further sustain the California real estate boom.

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With the price of homes continually pushing higher on the West Coast, particularly in Southern California, many wonder whether it is more economical to buy or rent. Sometimes, renting isn't a bad idea, especially if you are not ready to make the commitment that home ownership requires. Click here for an interesting story on whether you should buy or rent.

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According to Standard & Poors housing volatility index, Southern California is the most volatile real estate market in the U.S.

Out of the top 10 housing markets in the U.S., 7 are in California, particularly concentrated in Southern California. For example San Luis Obispo was the number one most volatile market, followed by Ventura at number 3, Santa Rosa at number 5, Orange County at number 6, Riverside number 7, Los Angeles number 8, and Yuba City at number 9.

So, should you sell right now, before the bubble crashes?

The highest house values are on the coasts of California and the Northeast, which also happen to be the best areas for growth.

Therefore, while 20 percent appreciation gains per year will eventually end, it is quite possible that gains already made will hold, and appreciation growth will simply slow.

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According to CNNMoney, "housing starts took their biggest tumble in almost 11 years in November, raising worries about the housing market and the strength of home prices in the long run."

Building permits are an important guage for determining the strength of the real estate market.

Nonetheless, analysts are taking the figure with a grain of salt. Some are even implying that the decline is partially due to shortages of materials caused by this hurricane season.

The more important factor, most analysts seem to agree, is mortgage rates, which are still extremely low, though expected to rise slowly over the next year.

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According to DataQuick Information Systems, Southern California home prices have still not burst, rising 23% in November from a year ago.

While the number of homes sold dropped slightly, area home prices were up at least 23 percent on the low end and almost 35 percent on the high end, resulting in a median home price of $415,000.

Areas that were initially depressed, particularly the Inland Empire, continue to lead the Southland in median home price gains. San Bernardino County led the area with a 34.6 percent gain, followed by Riverside County at 29.1 percent. Ventura County hit 25.8 percent, San Diego County 23.9 percent, Orange County 23.8 percent, followed by Los Angeles County at 22.7 percent.

There are; however, indications that the market continues to slow down. Most important, the stock of homes in the area has risen to a 3.5 month supply, up 88 percent from the same time a year ago.

The local housing market cannot sustain 20%+ gains in price according to most analysts. Nonetheless, most real estate experts predicted some bubble bursting many months ago. Most observers believe that the run-up can only be sustained by continued, historically-low mortgage rates.

Yesterday, the Fed raised rates for the fifth time this year, a trend which many believe will continue into next year. Still, mortgage rates have been impacted little by the small rate increases of the Fed. All things considered, this should ultimately, slowly, push mortgage rates up.

When, and how much mortgage rates rise is anybody's guess.

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Mortgage applications were down last week, mostly due to a drop in refinancing activity.

According to the Mortgage Bankers Association reports, 30-year fixed mortgage rates average 5.65 percent last week, just a bit down from the previous week's 5.68 percent.

The holidays are typically a slow time for mortgages and refinancing, so the results were not that unexpected.

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Mortgage applications were up a little over 3 percent last week.

The average fixed 30 year mortgage averaged about 5.68 percent, amid talk that rates are about to start going up, albeit slow. A week job's report helped keep rates low last week.

Refinancing has continued its downward trend.

Use of adjustable rate mortgages was up last week, as more buyers seek creative ways of being able to afford to buy a home.

According to a new study by UCLA, California and the Nation are in a housing bubble.

Fortunately, the burst is not supposed to be harsh. In fact, the overall economic forecast is good for 2005. While construction and the economic recovery will be slowed a bit, there should be no stall.

Of course, not everyone agrees that California is in a bubble. An LATimes.com article states, "They say real estate prices today are rationally propelled by low mortgage rates and high demand, while construction is justified by population growth. In California, they note, demand continues to be strong, and building in many areas has been constrained by land limitations and regulatory hurdles."

"To have a bubble, you have to have oversupply," said Alan Nevin, chief economist for the California Building Industry Assn. "We don't have oversupply."

There is no way of predicting if, or when the bubble might burst. Southern California housing prices continue to appreciate by at least 20% a year. Still, as the supply of homes increases, home prices seem to be slowing in many areas of Southern California.

Most expect that appreciation will slow, but they don't expect any serious depreciation.

Click here for the complete LA Times article.

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In today's real estate bubble, buying a home can be a quite an endeavour.

Mortgage brokers and real estate agents have more tools to get you over-extended and in financial trouble if you don't stay in control.

Before buying a home, you simply must get pre-approved for a mortgage, but before you do this, you need to figure out how much you can afford to spend each month. Just because, on paper, you can afford more, doesn't mean you should.

In a hot market, this is extremely important. In such markets, you must plan on a bidding war, so you better have a good idea of what your closing costs are going to be on top of any additional bidding and utilize all of that to figure out what you really can afford.

For new buyers, single family homes might be too expensive, unless you are willing to live far, far out in the suburbs, or if you are willing to move into more urban, up-and-coming neighborhoods. Otherwise, the condo market might be your best bet.

The most important thing about purchasing your home is understanding your finances. Once that is accomplished, and you are preapproved, stay realistic and facilitate the fact that you are going to close as quickly as possible, with as few problems as possible.

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Ultimately, that question is simple to answer, yes it is better to own than to rent. Historically, homes and real estate appreciate in value. There are ups and downs in this cyclical market, so there are better times to buy, but buying has more potential.

The buy versus rent question; however, is also dependant upon one thing, length of stay. If you are in for the long haul, then much like stocks, your investment will grow. If you are in for the short term, there are many risks.

Additionally, homeownership has lost some of its tax incentives over the years, so there are definitely situations when renting might be favorable to owning.

Moreover, some areas just don't appreciate and people have a tendency to over-invest in real estate.

Nonetheless, according to Liz Pulliam Weston you can make owning more profitable than renting if you can stay put for at least 3 years, psychologically prepare yourself for the responsibility of homeownership, have some extra savings, and manage money well.

For more tips to make homeownership successful, click here for more advice from Ms. Weston.

Yes, mortgage applications were down last week, again. Of course, this is on par for this time of year, when the holidays take over.

Nonetheless, a today's ned Fed Report claims the economy is humming. The labor market is doing well and there is increased business lending. This good news has some banking industry analysts predicting mortgage rates are finally going to start rising over the next couple of months.

The Fed. Report noted that the real estate market was healthy overall, but that some markets had already started to cool. Therefore, rate hikes should be gradual.

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