As a consumer, when you are happy and you know it, chances are you'll show it by spending money.
That's just what's happening in California where optimistic homebuyers are going gaga over the prospect of buying into one of the nation's hottest recovering housing markets.
The California Association of Realtors (CAR) says homebuyers are more optimistic about home buying than they were four years ago and that's a sign of an improving market
CAR's "2012 Survey of California Home Buyers," found that more home buyers this year believe home prices will rise, with 25 percent saying prices will rise in one year; 41 percent said they'll rise in five years and 73 percent said they believe prices will rise in 10 years.
Compare that to only eight percent, 35 percent, and 60 percent, respectively, in 2009, when CAR first posed the question.
Barring any unforeseen economic or natural disaster, the Golden State's homes prices are well on track to continue spiking in 2013 .
In November, the median price hit the highest year-over-year increase since June 2004 with single family home prices rising 25 percent and condo prices up even more, by 26 percent, according to CAR .
Real estate analyst Bruce Norris of the Norris Group in Riverside, CA says the median price in California will rise by 20 percent in 2013.
"My best guess is that California we will have significant price inflation. Prices could escalate so strongly that we will think we are in 2004 instead of 2013," said Norris.
Again, barring any unforeseen event - like dumping or slashing the mortgage interest deduction or capital gains tax exclusion.
CAR's survey also found that the mortgage interest deduction is extremely important to home buyers across all income levels and age groups - 79 percent of all home buyers said that the mortgage interest and property tax deductions are "extremely important" in their decision to purchase a home.
"As we approach the new year, it is likely that sales and prices will remain solid moving forward, dependent upon the strength of the economy and if Congress preserves the valuable mortgage interest deduction all homeowners, especially those in California, depend on," said Leslie Appleton-Young, CAR's economist.
The deductions are equally important across both income and age groups with the majority of Generation Y, Generation X, and baby boomers all indicating that mortgage interest and property tax deductions are "extremely important."
"Its clear that home buyers at all income levels and ages value the tax deductions associated with purchasing a home," said CAR President Don Faught.
"The mortgage interest deduction plays an important role in buyers' monthly budgeting. Without this tax advantage, housing affordability would be negatively impacted and potentially price out many would-be buyers," Faught said.
CAR's survey also found: