Emmet Pierce and Lori Weisberg However, University of Southern California economist Raphael Bostic disputes predictions of a housing bubble ready to burst. He believes demand will continue to outstrip supply, leading to an upward pressure on prices. "The increase in mortgage rates will slow the rate of appreciation in the market. The question is, will it slow it by enough to where prices will actually fall," said Bostic, of the USC Lusk Center for Real Estate. "We're not likely to see that happen because excess demand has been so great and appreciation rates have been so high, we'd have to see real economic dislocation at a macro level." Bubble or no bubble, Paul Devine and his wife, Susan Marshall, say they have to sell their tiny Normal Heights home and buy a larger house now that they have a baby. The continued run-up in housing prices does not concern them, although they know they need to look in areas of the county where they can get more for their money. "The way I look at it, if you're planning to keep the house for a long period – more than 10 years – you're not affected by these short-term corrections," said Devine, who hopes to get as much as $440,000 for the 720-square-foot home he and his wife bought five years ago for $189,000. "Our plan is to buy a house big enough for two kids, and that will hold us over for 10 years. If the market were to totally fall through the floor, we could continue to afford it. The value of the house is only the value the day you sell it." With all the mixed messages, consumers may have a hard time reading the housing market in 2005, said John Karevoll, an analyst with DataQuick Information Systems. "I don't think I have seen as wide a range of forecasts," he said. "You can find a forecast that tells you what you want to hear."
