Forrest Maltzman, a college professor, sold stock in July to buy the house next door in Bethesda, Md., for $740,000. He plans to rent it to cover the mortgage, then sell for a profit in a few years.

In the hottest U.S. real estate markets, including the Washington area, where median prices rose 22 percent in the year ended Sept. 30, investors such as Maltzman expect better returns from real estate than from equities.

"I have a lot of faith in real estate," says Maltzman, 41, who teaches politics at George Washington University.

About 30 percent of condominium buyers in Washington and San Francisco and 40 percent in south Florida are obtaining mortgages for investment purposes, says Gregory Leisch, chief executive of Delta Associates, a real-estate research firm. In south Florida, median home prices are rising by as much as 29 percent annually; in southern California, 36 percent; and Las Vegas, 54 percent.

That's a sign the market may be overheating, says Stephen Roach, chief economist at Morgan Stanley in New York.

"The latest trends in house prices and savings are disturbing," Roach wrote in a Dec. 3 note to clients. "They underscore the distinct possibility that America's asset economy is in the midst of yet another bubble-induced blow-off."

An economic decline in these high-growth pockets, especially one accompanied by job losses, might cause investors to dump properties, undermining local housing values. With the U.S. personal savings rate at a record low of 0.2 percent, a decline in home prices may narrow retirement options.

An October report by Fannie Mae Chief Economist David Berson, using data from the San Francisco-based research firm LoanPerformance, said the proportion of people getting home mortgages for investment purposes nationwide rose to 9.2 percent in mid2004 from 5.5 percent in the middle of 2003.

More of those people are using money for down payments that they once had invested in securities, says David Lereah, chief economist at the Chicago-based National Association of Realtors.

The enticement to buy houses and condos is strong in areas such as Washington, where the median home price has risen 69 percent to $362,400 in the past three years. During the same period, the benchmark Standard & Poor's 500 Index has risen 9.8 percent, including reinvested dividends.

The nationwide increase in median home prices in the year ended Sept. 30 was 7.7 percent, according to the realtors association. That leads most economists, including Federal Reserve Chairman Alan Greenspan, to conclude that there's no national housing "bubble" that might destabilize the economy.

Dean Baker, director of the Center for Economic and Policy Research in Washington, said prices have gone up "in enough regions that it can have a national economic impact."

Fast-growth markets include Miami, where median values in the last year have risen 23 percent; Fort Lauderdale, Fla., up 24 percent; West Palm Beach, Fla., up 29 percent; San Diego, 33 percent; and Los Angeles, 24 percent, according to the realtors association.

The median increase in housing prices for the Charlotte area was not available. Average prices rose 3.42 percent for the year ended Sept. 30, according to the Office of Federal Housing Enterprise Oversight. That was well below the national average of almost 13 percent.

Some Fed officials are concerned. The minutes to the central bank's Dec. 14 meeting say that low interest rates may be encouraging "excessive risk-taking." They cited "anecdotal evidence that speculative demands were becoming apparent in the markets for single-family homes and condominiums."

Nik Shah, 31, a mergers and acquisitions consultant, owns $2 million worth of condominiums that he rents in Washington's Dupont Circle, Foggy Bottom and Georgetown neighborhoods and says the value of each has doubled in the last two years.

"It's like buying a bond," Shah says. "I bought it and I'm getting a coupon payment and the value is appreciating."

Now, Shah says he's stopped buying because the market may have overheated.

The Washington area's price gains are supported by job growth in the region, said Stephen Fuller, director of the Center for Regional Analysis at George Mason University in Virginia.

"When the stock market was flying high, only 10 percent of condo buyers were investors," says Delta's Leisch from his office in Arlington, Virginia. He estimates that 30 percent of Washington condos now go to buyers seeking investment gains.

Prices for vacation homes in resort and coastal areas are likely to rise at twice the rate of the overall residential market, says Lereah, the association's economist.