The Real Estate debate rolls on regarding whether or not we're in a bubble. I have always maintained that we're currently not in a bubble with the exception of some markets, mainly California. Others believe that Real Estate is the new tech and it's only a matter of time before prices implode. Many of the arguments made thus far have been technical analysis, such as overlays of Nasdaq and Real Estate Prices. But there is one important factor which has been ignored by both sides of the debate: the fundamentals. Unlike tech, Real Estate still has a positive cash flow. I would like to offer a personal example which excludes appreciation. It is possible to purchase a single family home or condo in Florida and lease it out at a monthly rate equal to ~130% of a 5.25% 15-year mortgage and other fees with a initial 10% downpayment. Utilities are billed seperate and other fees such as common areas are included. Also with tax savings such as interest expense, it takes care of a portion of the property taxes and insurance. So even if there is no further appreciation, I will still own the home in less than 15-years. If rents were to fall, I can afford to lower mine by ~27% before I breakeven on a monthly basis, but I will still own the home within 15-years. If rents were to fall significantly, and I had to lower mine by more than ~27% in order to find a tenant, only then will I have to tap a reserve fund but it won't be that bad as I will have some tax benefits. Now, having said this, I do believe a bubble exists in some markets. These are the ones I stay away from. Where speculators rely on appreciation to borrow more to purchase more. Or simply flip properties to other speculators after holding for 6 months. Where variable and I/O mortgages are common place with their teasear introductory rates. I strictly look at rents in a given area and find out how large a downpayment is needed in order for the average rent to easily cover a 15 and 30-year fixed mortgages. If the downpayment is above say 15% of the price of the home, I believe it to be in a bubble and go look for some other market to invest into. Believe it or not: money still can be made in Real Estate and for that reason I believe Real Estate prices to continue to appreciate. While I don't consider appreciation in my purchasing calculations. It does play a major factor in determining when it's time to sell.