Some people call it a boom. Others say it is a runaway housing market that cannot be sustained.

David Lereah prefers to describe the current cycle as a "good, healthy real estate expansion." And he believes it will "continue into the foreseeable future."

"We're not at the end, we're at the middle," the chief economist of the National Association of Realtors said last week at the group's annual convention in Orlando. "We can take it into the next decade if the economy and interest rates cooperate."

Actually, Lereah sees several other potential stumbling blocks that could short-circuit the current expansion:

• An aggressive tax reform effort that wipes away the write-off for mortgage interest.

• Reforms that alter the housing mission of the government-sponsored enterprises which keep the capital flowing into the mortgage market.

• Oil prices that, if they go through the roof, slow big-ticket sales.

• An out-of-control budget deficit.

The NAR economist is worried about all these factors, he told reporters. But they're "yellow flags," not red ones, at least not yet. So he's not ready to tone down his belief that housing's joy ride can go on for quite some time. "Based on demand alone, this could go on for another five years," he said.

For 2005, Lereah is looking for 6.3 million existing houses to change hands. That's down form the record 6.55 million sales this year. But that still will be higher than the previous all-time high of 6.1 million set in 2003. So who's complaining?

Certainly not the NAR, whose nearly 1.1 million members handle the lion's share of those transactions.

"It's okay to have a down year," Lereah told reporters somewhat tongue-in-cheek. "We can have a down year and still be in a real estate boom."

Opps, there's the B-word again. Surely the economist, who spent a decade at the Mortgage Bankers Association before sliding over to the National Association of Realtors several years ago, didn't mean to slip it back into the conversation, did he?

No, he said, while this is indeed "a very hot housing market," one that's been on fire since 1992, he doesn't want anyone, especially the media, to get carried away.

We're not in a boom in the sense that the market for housing is out of control, Lereah carefully explained for reporters.

Yes, there are some "outrageous" places where price hikes cannot be sustained, he said. But for every one of those, he added, "I can name 100 good, healthy markets which have good, solid numbers."

The economist said while the record run of low mortgage rates has had a major impact on sales, other factors also have been at work. Indeed, "if it were just interest rates alone doing all this," he said, the current spurt "would have ended years ago."

Lereah mentioned a number of "structural changes" that have played a part in the extended cycle, among them technical innovations in the mortgage sector that have brought cost of borrowing down by $1,300 and the savings achieved by buyers who can now search for houses on the Internet.

But he said 6-plus million sales a year, year after year after year, has been fueled largely by demand. The demographic trends have been "phenomenal," he explained. "There's a huge pool of buyers."

If there has been a problem at all in the housing sector, it's been in the lack of supply. There just hasn't been enough houses to go around. And as a result, buyers who can pay the freight have bid up prices

Nevertheless, the NAR economist is expecting appreciation to cool somewhat next year, falling to the 5-5.5 percent range on average. That's still rather high, he said, just not as high as it has been.

"We should see somewhat slower price appreciation in 2005, but as we enter the year with inventories remaining low, home prices will continue to rise a little faster than historic norms."

He's also calling for mortgage rates to "hover" in the 6-7 percent range next year. "Hopefully," he said, rates "will stay below six a little longer." But even if they start bumping up against 7 percent, he thinks the market won't slow terribly because it means the economy is picking up steam, creating jobs and boosting the financial wherewithal to continue to trade houses.

Published: November 9, 2004

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.