Housing: boom or bubble?

In recent years, the U.S. has seen an extraordinary increase in demand for housing and a rapid rise in house prices. Data show that nationally, the average price of an existing home, adjusted for inflation, rose more than 8 percent in 2004 and 2005, a faster pace than in any previous year. Some people have questioned whether this rapid rise was sustainable, and recent declines in the housing market have made this question more urgent. In "Housing: Boom or Bubble?," Tim Schiller asks whether there was a so-called bubble in house prices or whether fundamental economic factors explain the rapid increase.