Is the Southern California real estate bubble ready to pop?

Some air might come out, but don't expect a loud pop anytime soon

Mortgage rates have hit their highest levels in more than two and a half years, and many analysts are predicting that rates could hit 7.0 before the end of year.

Still, higher mortgage rates are having little effect on housing prices. Even as the supply of houses increases, the prices of homes are still going higher.

So, when will prices drop? When will the Southern California real estate bubble burst?

Perhaps never, according to many followers of the real estate market. Price appreciation is cooling, but it is not leading to price depreciation. Stabilization of prices, it seems, is the key buzzword in home values these days.

While foreclosures were up some 45% across the Nation over a year ago in January, Southern California foreclosures were below the national average (more). So, if you were waiting to buy a cheap house from a foreclosure, you're probably going to be waiting much longer. Even if you find a foreclosure don't expect it to be cheap.

Moreover, while the backlog of unsold homes is increasing, this problem is particularly a problem at the high end, especially in homes costing more than $1 million dollars. Average priced homes are still pretty hot in most areas of Southern California.

Ultimately, experts claim that the costs of building materials and land has risen so much that we're probably looking at the new prices of homes. What's going to change most is yearly appreciation.

So, by this summer's selling season, homes will probably list a lot closer to what they did last summer, rather than 15 or 20% higher. At least that's the price at which they'll have the best chance of selling.