Is the real estate party over? For many, 2005 was the year to celebrate like it was 1999.

Despite interest rates moving up nearly a full percentage point from 2004, adding nearly $100 a month to most homeowners' payments, housing sales reached new records for the fifth year in a row.

The National Association of Realtors had predicted that 2005 would be hot, but noone expected another record-setting year. However, recent reports suggest that sales are slowing, inventory is building, and the nation is about to experience a housing hangover.

According to a new analysis by Economy.com, one-third of the top 100 metropolitan markets will experience a significant downturn in 2006 and 2007, a few by as much as 12 percent over two years. That's a significant enough reduction to turn from a boom to a bust.

Las Vegas, Nevada, with a median priced home of $296,000, leads the list of decliners, along with California cities San Diego ($598,700,) Santa Ana ($683,300,) Riverside ($362,800,) and Los Angeles ($412,900.) In the northeast, Nassau-Suffolk counties are expected to diminish in growth. The states with the most declining house values will be in California, Florida, and Maryland.

The flip side of that dour prediction is that two-thirds of the market is going through the roof. This is known as the rolling boom, a phrase made popular by NAR chief economist David Lereah. When home sales get too expensive for homebuyers, they pull up stakes and go somewhere new. California homebuyers, for example, invested in nearly one-third of the new homes sold in Las Vegas last year, suggests the California Association of Realtors. Now housing gamblers are pulling out and moving to Texas, Arizona, Oklahoma and Arkansas looking for new opportunities.

San Antonio, Texas, where the median home price is $129,900, leads the top 100 with over 15 percent growth by 2007 in real estate values, followed by Jacksonville, Florida ($164,700,) El Paso ($107,100,) Little Rock ($115,700,) Baton Rouge, ($133,800,) and Richmond ($191,800.)

The three states to watch with the most cities in the top 100 for growth are Texas, Tennessee, and Virginia, with an honorable mention to Ohio and New York.

Overall, home sales are coming down from the mountain peak, but they will level-out at a high plateau, says Lereah, but you'll still be in the nosebleed section if you buy this year.

Home prices went over 12 percent higher in 2005 to nearly $209,000. While increases won't be in the double-digits for 2006, you'll still pay six percent more for the average home - that's $221,000. Expect to pay a premium if you're buying new construction. Higher building costs will make new homes cost about $250,000 in 2006.

Thirty-year fixed-rate mortgages should trend up modestly during the second half of 2006, but the year will end about where interest rates are now, about 6.5 percent. Rising inventories mean more choice for homebuyers, but price increases show demand is still strong.

If you're a buyer, don't wait. There are too many indicators that jobs are plentiful, baby boomers, genXers, echo boomers and immigrants are all buying, and incomes are rising. That means demand is not going to go away, and neither will higher prices.

Take advantage of still historically low mortgage rates, and join the party.

Published: December 21, 2005

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. 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. To contact Blanche, email her at . For more articles by Blanche, click here.