There's been so much talk about the so-called housing bubble, that a pull-back in sales is an inevitable self-fulfilling prophecy. With so many pundits suggesting that housing surely can't get more expensive and that rising mortgage rates will discourage some homebuyers, our local experts say the market seems to be suspended in mid-air.

It's almost like a calm before the storm.

Realty Times has predicted a pause in housing sales and price increases for a few weeks now, but new reports suggest that housing may pick up again, faster than winds in a tropical storm.

Defying Wall Street expectations of a major slowdown due to rising oil prices and interest rates, the Commerce Department reported an unexpected 3.4 percent rise in new home starts, putting home starts for the year in record territory. This means that new homes and apartments will reach 2.1 million units for the year.

Most of the new building activity was in the storm-ravaged South, which has been unusually hard hit by hurricanes this year, but surprisingly, the impact of the storms on the record starts was minimal. That's because the South leads other regions in homebuilding anyway. Today, more than 45 percent of the nation's new homes are built in the South.

Some areas of government were not open to issue new building permits, which caused a slight drop in housing permits. Housing permits to build are issued before housing starts. Economists expect housing permits to gain in the South, once gulf state government offices shut down by hurricanes are open for business again.

Meanwhile, what about the rest of the economy?

Despite the ravaging storms of the season, the economy expanded in September, according to the Beige Book, a report compiled by the Federal Reserve. Some areas such as Dallas and Atlanta were disrupted. Even though they weren't in the paths of the storms, they took in thousands of storm refugees and provided millions of dollars in services. Along with Richmond and Philadelphia, Dallas and Atlanta passed higher prices on to consumers, but the Beige Book noted that firms in San Francisco, Chicago and Boston didn't have pricing power.

Housing markets remained strong or were growing in the San Francisco, Chicago, St. Louis and Dallas regions, while weakness in sales or construction was noted in parts of the Richmond district as well as in the Boston, Chicago, Cleveland, Kansas City and New York districts.

Could Dallas be part of what National Association of Realtors Chief Economist David Lereah calls the "rolling boom?" A rolling boom occurs when speculators feel they have played one area out and see opportunity in another. They move their investment fever to a new area, making cities like Dallas and Atlanta attractive targets for speculation.

For one thing, there's plenty of housing available at affordable prices, and Dallas is due for a correction. Like other areas that suffered from the dot-com meltdown, Dallas lost its share of high-paying jobs and has struggled to attract business back to its centers ever since. Dallas is the eighth-largest housing market in the country, and one of the most underpriced, according to the Office of Federal Housing Enterprise Oversight.

The Dallas Morning News reports that the "wave of Louisiana and Mississippi residents is already having a positive effect on the state's apartment market," and that many of those temporary residents have already decided to stay in Texas. And why not? According to house price appreciation by state ending in June, Texas housing prices have remained stable if not downright stagnant, coming in dead last in appreciation for last year before the current rolling boom began.

According to the PMI Market Risk Index, Dallas (along with suburbs Plano and Irving) are only at a little over 10 percent risk of being overvalued and it has an affordability index of nearly 132 percent which means it takes a lower percentage of income to buy a home in 2005 than it did in 1995. Home price gains have been stable overall at about three to eight percent annually for the past five years.

Published: October 27, 2005

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.