We've seen interest rates hold near or at record decade lows for about five years. Concurrently, we've seen the National Association of Realtors report two years of record home sales in 2000 and again in 2001. New housing is also at all-time highs with a burst of closings reported in February, with the NAHB reporting rising affordability for home buyers. Is the trend sustainable?

Many pundits say it is not. Housing is being called the next 'bubble' to burst. The NAR is already predicting a near-record year, which means sales won't reach 2001 levels. Interest rates are beginning to rise, and the Mortgage Bankers Association says they will be at 7.5 percent for a 30-year conventional mortgage by summer.

Rising interest rates will slow down the first-time homebuyer market, which moves the second-home buying and move-up market. What happens when home sales slow and mortgage money is tighter? Typically, housing inventories rise and prices drop when interest rates rise, but will that hold true this year?

Some conditions say housing won't slide as it has in the past. While the past is a great predictor of the future, there is some recent evidence that housing prices continue to rise even while the market goes soft.

Look at California after the dot-com fallout. According to a recent report by the California Association of Realtors, the median price of an existing, single-family detached home in California during February 2002 was $289,550, a 19.8 percent increase over the $241,690 median for February 2001, C.A.R. reported. The affordability index has dropped until only an astonishing 34 percent can afford a median home in California.

Yet, the median number of days it took to sell a single-family home was 39 days in February 2002, compared to 34 days for the same period a year ago. The number of homes listed for sale statewide dropped 14 percent, fueling demand despite higher adjustable mortgage rates of more than two points over the previous year.

The real issue for California is affordability, which is causing homeowners to regard homeownership as a cornerstone of personal wealth. Thanks to adjustable rate mortgages and other loan packages besides the 30-year mortgage, more people are able to buy homes that weren't open to them a decade ago. Once they get in, they want to stay in and ride that equity for all it's worth.

Will homebuyers react the same way in key markets across the country? Maybe, if homebuyers continue to believe that their housing purchases are an asset. Recently, housing equity has yielded greater returns that stock portfolios. What could be a better deal than homeownership?

While it may look as if little could happen to hurt existing housing sales right now, something is looming in the shadows that could be the pin that pricks the bubble.

As housing stock ages, it requires more replacement and upkeep, but there is also a new problem that is gaining attention - mold. Many mold problems in housing are being blamed on El Nino that blew through in 1997 and 1998, leaving California and Texas in floods and mudslides and the new tort du jour - mold remediation and litigation.

While new housing can have its share of mold problems, too, mold in older homes is much more prevalent to the point that leading insurers such as State Farm and Allstate have refused to issue new homeowner policies in Texas and California. Existing homeowners have been told that there will be changes to the coverage. Homeowners have the choice of excluding their policies for mold, or paying higher premiums to include mold remediation. To get full coverage for mold could raise insurance costs as much as $800 annually.

Insurers are including mold remediation in new policies, raising insurance costs to record levels. That could cause a lot of home buyers to think twice about older homes. About 80 percent of all structures have some kind of problem with moisture, and with a differential of only about $20,000 nationwide between new and existing homes of comparable size and quality, home buyers may prefer to build new. But they won't find relief there, either. To save heating and cooling costs, some new homes aren't well ventilated, and poor ventilation is a primary condition for mold to grow. Builders are already addressing the problem of having built some new homes too well.

A possible flight to new homes by first-time or move-up buyers could cause either a glut of existing homes on the market or a wave of teardowns to be replaced with new housing. Either way, the outcome is good for the new home market, not the existing home market. If the existing home market suffers because of mold and other environmental issues, affordability for first-time homebuyers will no longer be a problem. They will have their pick of homes.

This year will be a test. The warm weather winds of El Nino come about every five years, setting record rainfalls and snows in areas that are normally dry.

It's 2002, and our five years are up.

What can Realtors do? Encourage sellers to get inspections of their homes that include searches for mold. Encourage buyers to get multiple inspections by specialists in pests, structural integrity (including gutters and other drainage solutions) and mold. For first-time buyers, be ready to help them get coverage with a list of insurers which are willing to write new homeowner policies with prices that include mold remediation. As rates could as much as double with mold coverage, help buyers figure their affordability (PITI) by including much higher rates for insurance coverage than in the past.