With Wall Street sagging and the rest of the economy looking soft this summer, are the still-spiralling prices being paid for new and resale homes totally out of touch with reality?

A number of gloom and doom analysts suggest that judgment day is just around the corner for home real estate, with prices at their peak before the inevitable crash. But many economists argue that housing prices--high as they may seem--actually reflect important underlying economic forces. Prices are not off the charts at all, they argue. They are simply being influenced by very different forces than those that govern the stock market.

Here’s their take on what’s really fuelling housing’s continuing vigor:

Published: August 12, 2002

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.