According to the AP, "the government said sales of new homes shot up 12.2 percent last month to the highest level in history."

The new home sales report, combined with yesterday's existing homes sales, seem to clearly indicate that, at least in the short term, the real estate market is still very strong.

Tomorrow should be a good real estate news day, with lots of bubble talk. Today's existing homes report really surprised experts, so there is a lot of interest in tomorrow's report. Nonetheless, today's data seem to indicate that the real estate market is going to continue to cause 'shock and awe' for some time.

The view that the current real estate market is a bubble is becoming much more common. A recent survey "of 400 affluent Americans by McDonald Financial Group found that 60 percent now believe there is a housing bubble, even if many of those don't think the bubble will burst for a year or more." (CNNMoney)

Need a Los Angeles real estate agent?

The National Association of Realtors reported this morning that existing home sales rose 1 percent in March, easily beating most expectations. Such numbers also indicate the current strength of the so-called real estate bubble.

Following the report, Jeffrey Otteau of the Otteau Appraisal Group, told CNBC that the real estate market has real legs and will continue to be strong for the next five years. Ultimately, demand is far greater than supply, Mr. Otteau believes, and market fundamentals, including job growth and lower levels of home construction, should keep it that way. While the rate of appreciation will slow, home values will continue to rise.

On the other hand, Professor Shiller of Columbia countered that bubbles are psychologically-driven and have nothing to do with real estate market fundamentals. Real estate buyer expectations are becoming unrealistic and will eventually force the bubble to pop according to Shiller. Nonetheless, citing March's strong existing home sales, Mr. Shiller noted that it could still take a few years before the bubble shows any signs of depreciation.

Mortgage applications dipped last week, according to the Mortgage Banker's Association, despite lower rates. The average 30 year fixed mortgage rate was 5.83 last week. The average ARM rate fell to 4.22%.

For the first time since June 2003, Southern California home prices have appreciated less than 20%, falling to 18.6% according to DataQuick Information Systems.

Overall, home sales were up and the average home price in the area for March was $439,000.

More important, the supply of available homes is dwindling in Los Angeles and Orange County, where supply has dropped to half of what it was just 6 months ago. Combined with low rates, the lack of supply of properties for sale should keep the market strong for the near future.

Defying the odds and expectations, mortgage activity shot up over 6% last week, as 30-year fixed mortgage rates crept up slightly.

As refinancing activity continues to decline, ARM activity is way up. In fact, ARM rates, or rates on Adjustable Rate Mortgages actually dipped to 4.28%, as ARMS have risen to almost 40% of all mortgage activity.

The AP is reporting that according to the Mortgage Bankers Association, adjustable mortgages have continued their increase in popularity, with more than a third of all mortgages fitting into that category in recent weeks. Many lending experts say that people are looking at houses like cars, "people are fixated on 'Can I afford this now?' and not considering what it will cost over time." Some economists worry that such behavior could crash the real estate boom. more

The housing market, overall, seems to be slowing, or at least showing signs of slowing. Of course, there are still some sizzling markets, such as Southern California and Southern Florida, where large percentages of buyers are real estate investors, pushing home prices beyond the reach of almost every citizen.

So when is this speculation going to cause the market to pop?

Even some of the biggest bubble busters believe that the market could continue some of its frenzied pace for another year or two, as long as rates don't spike.

Immigration is almost certain to continue to drive demand, and as long as jobs and income growth continue, there is no reason to believe that home prices won't retain their value or even appreciate, many economists argue.

Nationwide, and especially in many hot markets, apartment vacancies are falling and pushing rents higher. Los Angeles, one of the most mentioned "bubble" markets, currently has a very strong rental market. Since rising rents are the opposite of what would be expected in a "bubble" market, one is left to question the word, bubble.

Nonetheless, rates are going up, and as that happens, more and more Americans will be priced out of the real estate market. Additionally, the real estate boom has been growing jobs and consumer spending. In just the last two years Americans have taken almost $400 billion in value from their homes in a spending spree that has floated the economy. What happens if that ends?

Moreover, as home prices have shot higher, many buyers have become quite creative financing their home purchases and risk getting burned in the next few years. When this threat is combined with higher rates, reduced mortgage activity, and reduced home building, jobs could be lost.

Without really good news from somewhere else in the economy, these factors are sure to eventually have an affect on home prices. Ultimately, whether the real estate market just rusts a bit, or busts, has not yet been determined.

According to the National Association of Home Builders-Wells Fargo Housing Opportunity Index, Los Angeles is the least affordable housing market. Measuring the percentage of homes sales that are affordable to middle-income families, as well as property taxes, current interest rates, and some consumer spending factors, the index ranked Los Angeles last in the 4th quarter of last year at 5.2%, with San Diego just behind at 5.3%.

Watched CNBC's town hall on the real estate bubble last night, and one thing is certain, nothing is really certain. For me the two things that really stock out were: 1.) The real estate bubble would probably be better described as a balloon that might lose a little air, and 2.) Creative, unscrupulous financing will continue to threaten the real estate boom and the entire U.S. economy.

Of course, an economic boom, particularly one with massive job creation, could change everything, yet no one really knows what that might mean for the 'bubble'. Be careful.

Is it fair to compare the real estate bubble to the Internet bubble?

That really depends on who you ask.

While there might be a real estate bulge, a bubble along the lines of the stock market bubble seems excessive. CEO Robert Freedman of GVA Williams, a commercial real estate firm, basically told CNBC this morning that comparing real estate to the Internet is like comparing apples to potatoes.

Anyway, CNBC is doing a real estate bubble "Town Hall" at 8 and 11 EST. With experts covering most perspectives it should be very informative. Moreover, as Williams also told CNBC, stay focused on the fundamentals and be watchful of rate spikes, which will cause asset values to drop.

Fixed mortgage rates dropped last week, falling back below 6.0. The dip did not; however, increase mortgage activity. According to the Mortgage Banker's Association, mortgage activity dropped more than 4 percent last week. Refinancing also slid for the second week, falling more than 3 percent.

According to the LATimes, Los Angeles rents will rise as much as 6% this year, as both rents and occupancy rates continue to rise. The average rent in Los Angeles county will be about $1500.00, versus $1520 in Orange County, and $1080 in the Inland Empire.

In a rent to buy ratio, Los Angeles County appears much healthier than Orange County. Since the Orange County median housing price is significantly above Los Angeles, while its average rent is not. By that measure, Orange County would appear more bubblish than Los Angeles County.

More on the California real estate bubble.

Are you interested in purchasing a home, but you are not sure where to begin?

Don't begin by looking for houses that catch your attention and then calling the listing agent. That is usually the worst place to begin your search.

First you must be pre-approved for a mortgage (See things to do before buying a home).

Then, ask friends, neighbors, or co-workers for referrals, but remember that this is just a starting point. Good real estate agents don't have to do every deal. Often, the best agents specialize in specific markets, thus, good agents are often willing to give referrals to other agents that specialize in different markets.

Try to interview more than one candidate, even if just over the phone. Meet with all serious prospects. The better an agent understands you and can communicate with you, the better your real estate purchase. Far too often, hungry agents will try to do any and every deal, caring first about commission, second about you as a customer.

You need to have a great relationship with your agent. Anything less is unacceptable regardless of their reputation or success. Customer relationships are built by one thing, honesty.

You must be first. You are not wasting a real estate agent's time. A good real estate agent will be able to quickly understand what you want in a home, and make recommendations about what is and what is not possible about your requirements versus your ability to pay, etc.

A good agent can make your real estate purchase one of your best decisions, or a bad agent can make it one of your worst decisions. Put you first.

O.K., so you financed with an ARM. Now, constant talk of real estate bubble, crash, and burst has you a little edgy. You want to stay with the lower ARM rate, but you are afraid that housing prices could drop and rates could spike. You've heard that mortgage bonds determine mortgage rates, but you have no idea what that means. Is there anything you can do? Become a mortgage loan originator. Don't know how? Google that keyword combination. Or, check out this tool offered to mortgage originators. There is information out there that you can use to protect your asset.

Mortgage rates. What's the deal? Why are they historically low, is it the Fed? Why have California real estate prices risen so high? Is the California real estate bubble going to pop?

Almost everyone has a question about real estate, and it is very hard not to draw parallels to the bubble of the stock market. However, though there is speculative flipping in the housing market, especially in hot areas such as Southern California, land is more of an asset than the typical .com.

Naturally, this has caused competition for real estate, particularly in areas where massive growth from immigration is occurring and expected into the future. While people might not need the Internet, they do need a place to live.

Of course historically low mortgage rates have helped, but new mortgage packages and qualifying criteria are the real difference. ARMs, or loans with variable interest rates, have enabled home buyers to buy more house than would historically be affordable. Additionally, 20% down is not required, nor is perfect credit.

Thus, many believe that they can sell their home before their ARM becomes variable, or refinance before mortgage rates become too high - and everyone on an ARM should be thinking about this.

Watching the Fed definitely helps predict mortgage rates, but most real estate and financial analysts will tell you to watch mortgage bonds. Mortgage bonds, they say, much more accurately predict the action of mortgage rates.

If you financed your home with an ARM, or if you are planning to finance a home with an ARM, it might be in your interest to learn as much as possible about mortgage bonds.