By the end of 2004, the National Real Estate Investors Association's 20,000 affiliated members were double the previous year's numbers, but even at 20,000, represented only about one fourth of all U.S. real estate investors in investment clubs, the association said.

HouseValues.com recently advised that real estate agents who live near beaches, mountain resorts, gambling meccas, theme parks, and other popular vacation destinations to consider going after a share of the resort/vacation home market.

"Pocket Up To $25,000, $50,000, Even $100,000 In Just 90 Days!" blare full page newspaper advertisements from traveling snake oil investment motivators pitching tents to preach the rags-to-riches gospel of real estate investments.

Residential real estate investors have become a driving force in the residential real estate market -- much as the dot com stock market did to create the New Economy of long term economic growth -- and that's got economists and real estate market experts squirming.

How many of the investors are hard core speculators isn't certain.

Speculators, unlike true investors who typically are in it for the long haul, take greater risks and often engage in flipping or quickly buying and then reselling -- hopefully at a profit.

Speculators played a significant role in driving up home prices before California's housing market crash in the late 1980s.

Today, with appreciation running at a much higher fever pitch, Federal Reserve officials and other economists are expressing similar concerns voiced then when speculative real estate investment activity in certain markets artificially inflated home-appreciation rates and then left in the face of a collapsing market.

Too many real estate investors, speculative or otherwise, who become as fickle as the dot com era's stock buyers and leave the market will create a void that's difficult to fill at a time when energy-price and interest-rate induced inflation is already exacerbating conditions in an economy that hasn't fully recovered from the last recession.

"There is certainly money to be made in real estate but investing is not without risks. With so many new people in the market, many investors could risk profits without realizing it," says Nigel Fenwick, founder of The Association of Home Investor Specialists (IAHIS).

Investors accounted for what's likely a record 23 percent of all home sales last year, according to the National Association of Realtors' recently released "2005 National Association of Realtors Profile of Second-Home Buyers".

NAR says only three percent of all home buyers sell their homes within a year but, while the investor purchase portion is 23 percent, other second home buyers who become aware of the perceived potential for a return on their property may very well take a more speculative approach. The second home market now accounts for 38 percent of the existing housing stock and 36 percent of all homes purchased last year, NAR said.

"These aren't second homes. You know where that down payment is coming from. People are leveraging one price asset against another on a pure momentum play. We couldn't be at greater risk right now," said Robert M. Campbell Campbell a San Diego-based realty broker, investor and author of "Timing The Real Estate Market".

"Nobody wants to face the fact that we are living on our homes (A practice often referred to as "eating your home"). It's not pretty. We are living over our heads. It's certainly not income. We are using second homes to get airplane lessons and plastic surgery. Welcome to human nature. Go back and read the history cycle for 100 years. Nothing has changed," said Campbell indicating what must go up, will come down.

Noted geology, economic and planning experts on the DVD documentary "The End of Suburbia" report the world's oil production is peaking now, but enough alternate fuel technology is not in place to make a quick transformation from the dominant auto-dependent, big-home, energy-consuming suburban lifestyles. As more and more money goes to energy, that will have an adverse affect on how much households can spend on the roof over their heads, likewise forcing home prices down.

"The oil thing is real. Every $10 increase in a barrel of oil is a one percent out of the consumers budget. Greenspan has no choice but to increase interest rates and short term rates correlate with long term rates. When you see oil prices rise and interest rates rise, that's the end of it. It's only speculation how much more this market can stand. We are already overvalued," said Campbell.

If you are buying a home as shelter, there may be fewer consequences, provided you can keep your job and pay your mortgage.

Come-lately investors and greed speculators, however, could lose their shirts.

That's what happened in the Golden State in the early 1990s when Northern California fell first, followed by the rest of the state as private and federal employers fled, incomes dwindled, quakes rumbled, speculators pulled up stakes, sales fell and prices slipped -- by double digit percentages.

Fiserv CSW, a Cambridge, MS firm that tracks price appreciation, says home values nationwide have appreciated about 40 percent since 1995, but some markets like San Diego have enjoyed jumps as high as 160 percent. Compare that to the 18 percent increases in the 1980s and only 15 percent in the 1970s.

The trouble with a falling real estate market is, given the way statistics are released -- after the fact -- green investors may not know it's time to get out until it's too late. It's tough to see the peak until after the market it heading toward the trough.

For example, in Silicon Valley, CA, the big housing market tumble began with shrinking sales in March of 1989, but it wasn't until August that year when buyers and sellers became fully aware of what was happening.

"I'm telling people to haul their money out of Dodge and protect your capital and invest elsewhere (outside San Diego). I compare this market in California right now and the whole real estate market to the stock market of the 1999 and 2000. California, parts of the Northeast and Florida are like the Nasdaq," said Campbell.

"I haven't raised the red flag yet. Key indicators are still positive and we are still more likely to have appreciation than a decline, but the rate of appreciation has dropped for the last five months. We are starting to see cracks," Campbell said.

Indeed, the nationwide rate of home value appreciation in the last quarter of 2004, an annualized rate of 6.7 percent, was far off the 11.2 percent average annual rate from the fourth quarter of 2003 to fourth quarter of 2004, according to the Office of Federal Housing Enterprise Oversight (OFHEO).

Campbell says investment fundamentals always apply -- diversify your portfolio. Just as your portfolio shouldn't have been top heavy with dot com stocks in the 1990s, it shouldn't be housing heavy now. And when it comes to real estate you'd better be in it for the long haul. The down periods can last just as long as the up sessions.

Investors and prospective investors, especially rookies, should pay close attention to a primary set of indicators that can give some early warning signs of a pending downturn.

"Every month, follow a publication or publications to get the five key indicators. Start logging them. Use a spreadsheet to chart them. One or two months doesn't make a trend. Trends develop over the long term. Create a graph and start seeing them go up and down. This is not what I think. This is what the market tells me," Campbell says.

Campbell says the key indicators to watch are:

• Interest Rates. Rising interest rates have a depressing effect on real estate prices. Falling rates help generate demand. That boosts prices.

• Building Permits. When demand is strong, builders pull more building permits so they can build and sell homes. Unwilling to be stuck with homes they can't sell in a softer market, builders reduce the number of permits when demand drops.

• Home Sales. Simple principles of supply and demand affect home sales. When buyers buy, prices rise. When buyers retreat so do prices.

• Loan Defaults. Defaulting home owners are having job or money troubles or both. That signals a weakening economy.

• Foreclosure Sales. Foreclosures signal even deeper consumer money troubles and a worsening economy. It also signals dropping home prices.

Income levels are also key. If they don't keep pace with the cost of housing, buying a home to live in, let alone second homes, becomes more and more difficult.

"The biggest determinant, if you go back 60 years is that ultimately housing tracks with income. What doesn't track with income?" he asked.