Raphael Bostic, an economist at the University of Southern California's Lusk Centercolor> for Real Estate, said not only are consumers doing cash-out refinancings or using home-equity lines of credit, they are also spending other savings on the assumption that their housing wealth will keep growing.
In the past several years, such thinking certainly has proved correct. Bay Area home prices, for instance, have been hitting new records for the past 18 months or so.
However, many economists predict the market will cool. Nevin acknowledged the potential for a slowdown in the market. However, he does not expect home prices will decline, but rather to slow to 5 to 8 percent annual appreciation, down from the current double-digit increases.