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What's Next for Real Estate?

According to Dave Seiders, chief economist for the National Association of Home Builders, the underlying fundamentals of the real-estate market look healthy, and there are no signs of a slowdown in sight. Even if interest rates rise, as he expects, price appreciation will merely slow down, and prices won't decline on a national level. A bust, he argues, doesn't always follow a boom.

Dean Baker couldn't disagree more. The chief economist for the Center for Economic and Policy Research, a Washington, D.C.-based think tank, says the market is dangerously overextended. It's a classic bubble, he says, and when it pops, home values could drop by up to 30%.

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