According to the LATimes, low vacancy rates and ever-increasing home prices are pushing the price of rents higher. Overall, rents increased on average 5.5% compared to the same time as last year in Southern California. The average monthly rent rose to $1,419 in both Los Angeles and Orange Counties. With strong job creation, the Southland is attracting many new residents, but most of those residents cannot afford to purchase a home, thus occupancy rates of rental units continue to hover above 95%.

While many have pointed to Southern California as a leading bubble market, rising rental prices and low occupancy rates do strengthen home prices. If job creation continues to grow, it is hard to imagine any significant drop in home prices. While double digit rates of appreciation in home values are probably a trend that cannot continue, massive depreciation doesn't appear possible either - at least in the near term.

Southern California real estate prices continue to climb, but at a much slower pace than in previous months. According to a DataQuick study cited in the LATimes, "Prices in each of the Southland's six largest counties posted records, pushing the median price regionwide for all houses and condos to a record $465,000." Orange County hit a staggering $600,000 for the median price. San Diego County continues its cooling trend, but still hit $493,000 for the median price. Los Angeles County hit $475,000, and Ventura County topped $584,000. What this means for the real estate bubble is anyone's guess. Some economists think the data points to a 'softlanding'. Additionally, as long as job growth remains at current levels, many economists argue, housing prices should remain relatively stable.(Full LATimes story)

During a Realty Check on the Morning Call program of CNBC this morning, Kiplinger's Riskiest Real Estate Market Survey was the focus. Utilizing population trends, affordability surveys, and a jobs index, the riskiest markets in each region were listed. In the West, the Riskiest markets, in order, were San Francisco, Sacramento, and Los Angeles.

San Diego was not on the list, which I found a bit surprising. Perhaps San Diego has a far better job's outlook then the top 3 riskiest California markets? Hopefully, I'll have more on the Kiplinger study later.

A street sign realty check on CNBC this morning noted that the gap between home price growth versus income growth was the second highest in the Nation in California, at 19.6%. While Los Angeles led the 'unaffordable index', only 16% of California citizens can afford to purchase a median priced home. This has fueled the use of ARMs and Interest-only loans, which many believe will be the straw that broke the back of the real estate market.

The Mortgage Banker's Association is predicting slower, but still very strong home sales through 2007. Existing home sales should be up 2 percent this year, while falling 3 percent next year and 2 percent the following year. Even though overall sales are dropping, historically, even a 3 percent drop is still very good. New home sales are expected to drop one percentage point further than existing home sales in '06 and '07.

Overall, the MBA sees 30-year fixed mortgage rates topping 5.7% this year, 6.2% in 2006 and 6.3% in 2007. Originally, the MBA forecasted rates above 7.0% by 2007, and that reevaluation lower resulted in stronger real estate sales through the next two years.

Many real estate bubble advocates still support the idea that current housing prices are wildly over-inflated and that the high use of Interest-only ARMS will ultimately pop the bubble. In particular, either a significant drop in employment, or a rapid rise in mortgage rates, these real estate critics argue, could cause significant depreciation in many real estate markets. (More from CNNMoney)

Of course many of these bubble-believers have been making their 'pop' forecast for the last couple of years and continue to argue that it still might be a couple more years before their predictions materialize.

So you're interested in buying a house and your mortgage broker has asked you to sign an exclusive agency contract, but you're afraid. Don't worry, many experts think that exclusive agency contracts are a very good idea, especially if you are refinancing a home. In the case of a refinance, you can still get out of the exclusive agency contract because federal law provides 3 days after the close of your deal to rescind the mortgage.

While you don't have that same option with a new loan, Jack Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania, still thinks exclusive agency contracts are a good deal. Ultimately, signing such a contract lets the broker know you are a serious client, not just a prospect. Thus, most brokers will focus on closing a good deal because most mortgage brokers survive by client referrals. (MORE)

According to the Mortgage Banker's Association, fixed 30-year mortgage rates averaged 5.58 percent for last week, up 11 points from 5.47 percent the previous week.

Rates on one-year ARMs rose to 4.60 percent from 4.42 percent the prior week.

According to the California Association of Realtors, the median price of California homes is expected to reach $523,000 for 2004, up more than 16% compared to last year. "While lower than anticipated mortgage interest rates are helping offset the impact of rising home prices, they also are a significant factor in driving the real estate market to new heights," she said. "Home buyers concerned that today's favorable interest rate environment may not last are eager to purchase a home, while the inventory of homes for sale remains low." (Full Story)