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A bursting housing bubble will not necessarily wipe you out like a bursting equity bubble can. When your Enron or WorldCom or Global Crossing stock is gone, it's gone. The nice thing about housing is that it has inherent value. You can still live in it even when the housing market craters. There's nothing to do with stock in a company that no longer exists. Your house will normally be worth at least SOMETHING when the dust settles, unlike stock in a dead company.

Eventually, the GSE money pumps will run out of suckers. A Fannie Mae implosion would simultaneously compromise the bond, stock and real estate markets.

Eventually, the GSE money pumps will run out of suckers. A Fannie Mae implosion would simultaneously compromise the bond, stock and real estate markets.

In the ultimate nightmare scenario, there is no safety. Gold was confiscated by FDR. The value of cash can be wiped out in weeks if hyperinflation kicks in. Bonds default. Stocks crash. Businesses go under. Housing prices (in general) dropped sharply during the Depression. Commercial real estate investors seem to pop in and out of bankruptcy every other year.

But, bottom line, if I picked something to own in the nightmare scenario, my first choice would be a fertile farm in a hidden valley. My second choice would be a mortgage free home.

We are in a dangerous time. I'm not sure if we could survive something like the Great Depression today. In the 1930's, most of the country was on the same page from a moral, religious, and cultural viewpoint. And we almost didn't survive then. I hope to never see a simultaneous collapse of stocks, bonds, real estate, and (I would guess) everything else. It wouldn't be pretty.

Fearing a Bubble, Homeowners
Cash Out and Return to Renting

By RAY A. SMITH
Staff Reporter of THE WALL STREET JOURNAL

Convinced the housing market is a bubble about to pop, a number of homeowners are deciding to cash out -- and stay out. Instead of buying new homes, they are renting until prices fall back.

Even amid a recession and stock-market plunge, housing prices have shown little sign of easing, with some major markets still seeing double-digit increases this year. Economists say such cities as Boston, Chicago, San Diego and Portland, Ore., are overheated. As a result, some homeowners whose properties have soared in value in recent years are now deciding to get out, selling their homes as one might a stock when it hits a new high.

While no group formally tracks the number of people cashing out, brokers say they are beginning to see more of this, particularly in strong markets. Jacky Teplitzky of Corcoran Group in New York says so far this year four of her clients have sold their homes and pocketed the proceeds, versus none this time last year. The softening of the rental market is also helping to entice some of the skittish homeowners.