Many economists say decent price appreciation is still possible in several of the nation's real estate markets, particularly in the Pacific Northwest and parts of Texas. Tom Stevens, president of the National Association of Realtors said that the days of whopping 30% or 50% price gains are over. Though there is seemingly ominous data from realtors and a rash of warnings from homebuilders about a lack of demand for new homes, overall home prices have not shown major year-over-year declines.

Data released this week from PMI Mortgage Insurance, a unit of PMI Group, showed somewhat of an increased risk of a drop in home prices. According to PMI's U.S. Market Risk Index, there is a 29% chance that home prices will decline over the next two years in the largest metropolitan areas -- up from a 22% chance a year ago.

However, the index also showed that slowing price appreciation is balanced by underlying economic strength. A return to a more normalized appreciation climate is a natural outcome.

By M. Sese
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