San Diego County has experienced unprecedented increases in real estate values in recent years, with homes appreciating as much as 20 percent to 30 percent a year.

Such appreciation has given rise to the notion that there is a "housing bubble" —— that is, an unsustainable gain in home prices that, in effect, creates a price bubble that will suddenly "pop," resulting in a loss of equity by homeowners.

The housing bubble is an economic myth, particularly in North San Diego County, where demand for housing has long outstripped supply —— even in today's cooling market. A cooler housing market in which price increases are more in line with other economic growth factors does not signal the bursting of any so-called housing bubble —— or the end of a vigorous housing market. Housing price increases can level off significantly and still provide good investment opportunities for buyers and sellers alike.

While the home price-to-income ratio is currently above the historical norm in the San Diego region, the more relevant measure of a homeowner's mortgage-serving cost compared with household income is still at a very manageable level. It implies no widespread financial overstretching to purchase a home in our region.

The only threat we face is loss of confidence on the part of those who want to buy or sell homes and other real estate. The plain fact is there is a lot of misleading and jaded information out there.

For example, those pundits who try to compare real estate to NASDAQ's meteoric rise are missing a couple of important points. Unlike stocks, real estate, especially at the national level, rarely decreases in value. Even when declines have occurred, they've been modest at best. According to the Department of Housing and Urban Development, housing prices nationwide did not decline on a year-to-year basis from 1968 to 2000 —— a 32-year record.

Housing prices in the West declined on six occasions during that period; however, the largest annual decline was under 5 percent.

Unlike stocks and mutual funds, homes have utility. People live in them.

Should an unanticipated decline occur, people would be able to ride out any potential decline because they use their asset as shelter. In addition, many home buyers in the last few years have built up considerable equity in their homes.

In reality, things are not as desperate as they are made out to be. Based on the North San Diego County Housing Affordability Index's conservative traditional definition of affordability, there are at least seven areas in North San Diego County alone where one out of three households can afford the median-priced attached home.

In the end, it is the marketplace —— not panicky doomsayers ——- that will determine the future of our region's housing market. Continuing confidence in the viability of San Diego County and the fact that more people want and need to live here is the best evidence there is to disprove any housing bubble.

Kevin Forrester is president of the North San Diego County Association of Realtors.