Low interest rates and relatively easy access to mortgage money are just two factors that have caused a boom in residential real estate prices over the past few years. This phenomena has caused a number of analysts to ask whether a national "housing bubble" now exists and how its potential collapse could effect the economy. This is a complicated subject that is influenced by both national and regional issues.

Over the next several columns, well look at many of these issues and see if we can weave our way though the maze of possibilities that could impact the outcome of this concern.

Lets begin with a regional overview and remember the words of Tip ONeill, the venerable Congressman from Massachusetts who was fond of saying, "All politics are local." The same principle could be said of housing, at least according to a commonly used ratio comparing mean house prices to mean family income on a local basis.

Using U.S. Census Bureaus numbers from 2003 and looking at various cities across the country, we can immediately see how varied pricing is throughout the United States when the ratio is applied. On the low end are cities like Pittsburgh, Pennsylvania with a ratio of 1.47 and Corpus Christi, Texas with a ratio of 1.58. On the other end of the scale are Santa Ana, California and San Francisco coming in at 8.95 and 8.81 respectively. The average ratio for the entire country is 3.59.

Here are some excerpts from recent studies on these cities:

Pittsburgh - On December 18, 2005, the "Pittsburgh Tribune-Review" sited a study that showed "housing prices in the Pittsburgh region appear to be right where they should be, and importantly, they are not overvalued as are houses in some other areas of the country." According to the National Association of Realtors, the Median Home Price in the first quarter of 2005 was $106,400. This was a 6.6% increase from the first quarter of 2004 when the median price was $99,800.

Corpus Christi - Third quarter 2005 results from a Housing Market Analysis prepared by National City Corp found that Corpus Christi was still 8% undervalued when compared with other cities across the United States. The study done by the National Association of Realtors found "the local housing market is in excellent shape with a potential for significant equity gains." The median house price in the market is $123,000 and has appreciated approximately 30% over the past three years.

Santa Ana - What has continued to be a red hot market now has a "greater than 50% chance of experiencing price declines," according to the PMI U.S. Market Risk Index. The reported median house price is $710,000 with an appreciation factor over the past year of 10.4%.

San Francisco - The National City Corp study found that San Francisco was 30% overvalued. National real estate firm Caldwell Banker recently estimated that a 2,200 square foot house with 4 bedrooms, 2 bathrooms, a family room and a two car garage in a "middle-management" neighborhood would sell for approximately $1,300,000. There are some signs of the market cooling. In a 11/1/05 USA article, Judi Keenholtz, CEO of Empire Realty reported that "desirable homes in good school districts that used to fetch eight to ten bids now get three to four."

Given the above examples, we can begin to see pricing differences of housing throughout the country and therefore how difficult it is to predict a national trend.

Of course a single ratio like "family income: house price" is only one indicator and cant provide conclusive proof of a trend one way or another. Other pieces must be brought into play if we can gain a true overview.

In our next column well look at the ratio of "home price to rent" to get a different perspective and try to answer whether fans of the 49ers could retire with newfound wealth and happiness in the land of the Steelers.

Stay Tuned.