But after years of explosive gains in the value of real estate, some economists are warning that conditions are ripe for a cooling off of housing prices. While most experts reject the idea that there's a national real-estate bubble waiting to burst, akin to the collapse of tech stocks in 2000, they say rising interest rates are likely to cause the increase in housing prices to slow in the next few years.

As house-hunting season prepares to kick off this spring, that means that buying a house now might not be the fantastic investment it was just a few years ago. Creeping interest rates could put the brakes on run-away housing valuations.

But for now, interest rates remain at near historic lows. Real-estate industry officials are quick to point out that housing is still anticipated to appreciate and that prices have not dropped nationally on a yearly basis since the Great Depression.

In the Charlotte region, experts forecast slow but steady growth in housing prices. It's almost impossible for a bubble to burst here because for the most part, there's no bubble: Price increases in the Charlotte area, like most of the South, have been among the lowest in the country, thanks to the availability of land and abundance of affordable new housing.

Out of 220 metro areas across the country, the seven-county urban area centered in Mecklenburg County ranked 207th in housing price appreciation between the third quarters of 2002 and 2003, the most recent figures available, according to the Office of Federal Housing Enterprise Oversight. In the Charlotte area, resale prices rose just 2 percent in that time and just 19 percent in five years, below U.S. averages.

That means that the average $200,000 house bought in 1998 sold last year for $238,000 in the Charlotte area but for $276,000 nationally.

If there are areas across the country that will suffer from housing price collapses, they're likely to be along the coasts, in markets such as San Francisco, Los Angeles and New York, where the housing markets are far more unstable than here because of limited supply. Prices in Santa Barbara, Calif., for instance, have risen nearly 90 percent in the past five years, according to federal data.

"You can't just develop out into the ocean," says Doug Duncan, senior vice president and chief economist with the Mortgage Bankers Association, which represents home-mortgage lenders. "The coasts see bursts of more rapid but more volatile price changes than in the middle parts of the country."

Though experiencing explosive price growth now, coastal cities including San Francisco, San Diego and Boston saw housing prices fall slightly in the recession of the early 1990s. In contrast, prices in Charlotte at that time continued to rise.

Duncan is forecasting prices of existing houses to rise about 5 percent nationally this year, down from more than 7 percent last year. Even though many people have recently moved and are no longer looking for housing, the arrival of immigrants and retirement of baby boomers is continuing to fuel housing demand, he says.

Others, though, say recent increases in housing prices are a financial disaster in the making.

One of those beating the drum most loudly about the existence of a housing bubble is Dean Baker, economist with the Center for Economic and Policy Research, a liberal Washington think tank.

As with most goods and services in a market economy, housing prices are typically set by supply and demand. If supply is limited but demand increases, prices will rise. That's what most economists say is happening in certain coastal cities.

But Baker worries that there's also a psychological element at work that's artificially driving up housing prices, producing a bubble. He argues that just as investors expected big returns from buying technology stocks in the late 1990s, so too are real-estate speculators loading up on overpriced housing in anticipation of huge payoffs.

But demand, he says, will eventually soften because rental prices are still low and more people will rent instead of buy. About one-third of the nation's 106 million households are occupied by renters, according to census data. That drop in demand will cause prices to collapse, Baker says, leaving homeowners with houses worth less than their purchase prices.

"You'll have a lot of people in a home bigger than they can afford," he says. "You have middle class houses that can now be selling for $500,000. There's no way on earth the middle class can afford a $500,000 home, unless they have the belief that they will sell it for $600,000 or $700,000."

Most economists, however, dismiss the notion of a widespread housing bubble.

"Any analogy to stock market pricing behavior and bubbles is a rather large stretch," Federal Reserve Chairman Alan Greenspan told a bankers' group last year. That's because housing markets are local, not national, he explained. Also, it's more difficult to sell houses than stocks, keeping housing prices more stable.

Economists say rising interest rates would slow price appreciation, but interest rates are still near historic lows and are not forecast to rise dramatically this year.

Last week, the average interest rate on a 30-year fixed rate mortgage was 5.49 percent, according to the Mortgage Bankers Association. A year from now, most economists predict that rates will be in the low 6 percent range, still far from the 7.5 percent or 8 percent needed to significantly slow the housing market.

At a forum in January, five of the nation's leading housing economists, representing organizations including the National Association of Home Builders, the National Association of Realtors and Fannie Mae, agreed that there was no national housing bubble, although they said bubbles could appear in certain areas undergoing dramatic changes in the work force.

Even Baker, who says there is a national bubble waiting to burst, says prices won't fall everywhere -- probably just places that have had large increases in recent years.

"If you didn't see a big run-up in prices, you won't see a big fall off," he says. "I wouldn't be too worried if I bought a home somewhere in South Carolina or in the center of the country."

In Charlotte, real estate agents say business continues to be steady, and they see no signs of a widespread drop in prices. Of course, within any market, prices in some areas rise dramatically while other spots see prices fall.

The Charlotte Regional Realtor Association says it is unable to provide home-sale statistics by area, so it's difficult to know which areas are seeing the fastest appreciation. Across the region, the average house sold in January was listed at nearly $193,000.

But a recent analysis of property-tax records provides some clues. Last year, the Observer found that houses in neighborhoods surrounding uptown Charlotte, such as Dilworth, Myers Park and Elizabeth, commanded some of the highest price gains in the county, with buyers paying far more than assessed tax values. That appears to be because supply is limited and many people want to live close to town.

Suburban areas such as University City and Ballantyne did not appreciate as rapidly, the Observer found.

The diversity of housing choices in the Charlotte area disproves the existence of a bubble here, says Dan Cottingham of Cottingham-Chalk Associates.

"The reason the bubble theory is full of hot air is we've got affordability, period," Cottingham says. "With the stock market going up, people are feeling wealthier. They are fueling their desire to own real estate. That is still an active trend."