It's a bull market. It's a bear market.

The same skyrocketing home prices that are putting some home owners on Easy Street are sending others to the Poor House.

On the average, 53 out of 163 of the nation's largest metros and four of nine census divisions have seen double-digit home price inflation giving home owners nationwide an average 10 percent increase in equity in 2004. That's $25,000 on a $200,000 home, $50,000 on a $500,000 home -- in either case equal to a year's income for some workers.

However, the cost of owning a home now exceeds the cost of renting by an average 30 percent, one in three American households spend more than 30 percent of their income on housing, and more than one in eight spend at least half their income on housing.

"The State Of The Nation's Housing 2005" by Harvard University's Joint Center For Housing Studies is mixed report grading home price growth an 'A' and affordability an 'F'.

"While the future looks bright for housing investment, there is little cause for optimism that the nation's housing affordability challenges will diminish; in fact they are growing worse," says center executive director Eric Belsky.

The report says easy money, low inventories and demand from immigrants, minorities and baby boomers will keep the housing market booming through 2005 and perhaps beyond through the next 10 years, but not without some downsides.

"Housing affordability is a chronic problem and narrowing the gap between what decent housing costs and what low-wage workers and retirees can afford will remain a major national challenge," said Belsky.

It's not just getting in, but staying in, as easy money loan terms put more home owners at risk should market conditions slide and take them along for the ride.

On the plus side:

1. For the past 13 years, resiliency in the housing market turned the economic sector into a economic savior, despite 911, a recession and a languishing labor market. It was housing, fueled by historically low mortgage rates, that tempered the 2001 recession brought on by the dot com crash.

2. Single-family starts hit a record 1.6 million units in 2004, while new and existing new home sales grew to nearly 8 million.

3. Home ownership notched up to an all-time high of 69 percent in 2004, with households all ages, incomes, races and ethnic groups joining in the home buying boom.

4. Lifestyles improved as home owners tapped their equity to the tune of $317 billion in equity loans and second mortgages.

5. House price inflation has out paced per capita income gains by more than 4 times in 31 metros, 3-4 times in 19 metros, and 2-3 times in 32 metros. Condo owners gained equity even faster with price appreciation nearly three times larger than for single family homes since 2000.

6. Speculation may not be spreading as quickly as previously thought. The share of homes that flipped in one year increased from only 5 percent to 6 percent between 1998 and 2003, though 2004 and 2005 could reveal greater increases.

On the minus side:

1. The number of households spending more than 30 percent of their income on housing between 2000 and 2003 jumped by nearly 5 million, and those spending over 50 percent of income grew by 2.5 million.

2. Though rents in several markets were flat or declining, they were on the rise in many others including the Las Vegas, Miami, and Washington, DC areas.

3. The burden is higher for families with children. The number of those households spending half their income on housing was up 69 percent among renters in the lower-middle income group in 2000 to 2004, compared with a lesser, but still larger, 43 percent among owners.

4. The cost of housing has implications for other expenditures. Trading off more expensive housing for cheaper homes comes with added commuting expenses. Homeowners who devote 50 percent of their expenditures to housing, spend less for food and health care than those who spend a smaller share of their income for housing.

5. Flat interest rates last year forced buyers to pay $70 more per month for housing compared to 2003.

6. More affordable rental housing is disappearing from the market. While only units renting for more than $600 were added between 1993 and 2003, the number of units renting for $400 or less fell by 1.2 million.

7. Demand has pushed the inventory of new homes for sale near the lowest levels ever. New homes sales would have to fall by more than a third -- and stay there for at least a year -- to swing the market into the buyer's corner. Nearly 18 million homes were added nationwide between 1995 and 2004, while demand dictates as many as 20 million units are needed from now until 2015.

Despite the report's bullish outlook for continued home price increases, the bear could bite some home owners who get in over their heads with easy mortgage money.

Less than half of all home purchase loans in 2004 were standard 30-year, fixed-rate mortgages. Buyers are finding affordability not in cheaper homes, but in interest-only loans, low and no-downpayment terms and adjustable rate mortgages (ARMs). Interest-only loans, typically ARMs, have grown from a small share of home purchases a few years ago to nearly one third in 2004.

Should rates take off, ARM holders could face higher payments they can't afford. Home equity loan holders have already seen payments increase over the past year.

"For now, the risks in the system remain contained," according to Harvard's report.

However, the report goes on, "Repayment risk is rising as growing numbers of homeowners spend more than half their incomes on housing and/or take out adjustable-rate mortgages. In high-cost markets, the shares of borrowers with adjustable loans are especially large and the use of nontraditional mortgage products is also expanding. This suggests that affordability problems, rather than better bargains, are starting to drive loan choices.

In addition, the pace of house price appreciation in many markets is unsustainable. While home prices may achieve a soft landing even in the highest-flying metros, the ride could turn out to be a bumpy one."