Almost half of all Americans believe Chicken Little has a right to be hysterical.

Four in ten of those surveyed for a recent Experian-Gallup Personal Credit Index said there's a likelihood the sky will come crashing down on the housing market within the next three years.

In the monthly index, Experian and the Gallup Organization typically measure debt levels, mortgage payment burden, credit ratings, and debt extension capability. During the April 18-24, 2005 survey of 1,001 adults, 18 and over, however, the latest sampling included questions about the so called "housing bubble."

While 77 percent of those polled knew little or nothing about a housing bubble, when they were told a housing bubble is a condition of fast home price inflation that's difficult to sustain -- like an over-inflated bubble that eventually pops -- four out of ten said there's a likelihood the bubble would pop in the next three years.

Lower income consumers (with under $40,000 annual household income) were more prone to believing a housing bubble could occur in their area -- 46 percent of them said so. Only 30 to 33 percent of consumers with higher incomes feared a bursting bubble, the survey said.

"While double-digit price appreciation probably isn't sustainable in most markets, consumers who are looking to own a home for the long haul should be less concerned about potential short-term changes in home prices," said Jeff Lyons, general manager of RealEstate.com. A recent shift in Boom Bang Theory, that housing bubbles are local conditions came with a Federal Deposit Insurance Corporation report that said a more widespread housing market downturn may be more likely.

A record number of hot real estate markets, representing a 72 percent increase in real estate boom towns in two years, indicates more nationwide-level conditions are guiding the market.

"If national factors are coming more into play, then clearly the most important factors to look at would be the availability, price and terms of mortgage credit," according to the FDIC's "Revisited U.S. Home Prices: Does Bust Always Follow Boom?."

Consumers may be jittery about the possibility of a boom that goes bust, but they don't expect it anytime soon.

The Experian-Gallup Personal Credit Index found that only five percent of consumers expect housing prices to decline in the next year, while 70 percent expect them to increase, and another 24 percent expect them to remain steady. Only 25 percent of those surveyed expect housing prices to rise 10 percent or more in their area. The others expect much smaller increases.

Freddie Mac's Economic Outlook for May released this week forecasts a 7.9 percent annual growth in home prices, up from a previous forecast of only 6.8 percent. It also predicts home sales and starts will near, or surpass, 2004 levels. The forecast for fixed interest rates for 30-year mortgages is no more than 6.4 percent this year. Bill Wendell founder of the original RealEstateCafe in Cambridge, MA is sticking with the local boom-bust theory.

"People should be talking about this in their own market, because markets are all local. It is misleading to talk about a bubble as though there is only one. There are places that will fair better than others and certainly places that are more overheated and some that are not overheated at all," Wendel said.

The Experian-Gallup survey found most consumers carry mortgages that will help them ride out any downturn should prices fall and interest rates rise.

Of those surveyed, 75 percent expect mortgage rates to increase modestly over the next year, with half of them expecting an increase of no more than one percent and 33 percent saying a one- to two-point increase is possible.

However, only 14 percent of all consumers surveyed have a variable rate loan or adjustable rate mortgage (ARM) on their homes. The survey doesn't say that the percentage of those who hold ARMs is much higher in high-cost housing areas where home buyers look to ARM's cheaper monthly payments to increase affordability.

"It's gratifying to see that most consumers are aware that interest rates are on the rise and that mortgage rates will be affected," said Dennis Jacobe, chief economist for The Gallup Organization. "However, since they expect an increase, consumers should now consider alternatives to variable interest rate mortgages. If they wait until rates are one or two points higher, they may already be suffering financially," he added.

Among consumers surveyed who plan on borrowing money against their homes in the next six months, either because of buying a new home or refinancing, about one in five say they would be likely to take out an adjustable rate loan or mortgage -- with a low interest rate initially, but which would increase substantially after a fixed period of time.

"This is troubling because if there is a housing bubble, some consumers with mortgages could end up upside down, meaning they will owe more on their mortgage than their home is worth," Jacobe said.

Overall, the Experian-Gallup Personal Credit Index for May came in at 86, compared to an initial 100 benchmark rating set two months ago. It was down sharply in March to 82.

"The slight change in the Personal Credit Index suggests that consumers' feelings are stabilizing and perhaps they are experiencing a wait and see outlook, with regard to changes in the economy," said Ed Ojdana, of Experian.

"With short-term interest rates and housing prices continuing to rise, it's understandable if consumers are being cautious," he said.