Had an acquaintance who used to own a downtown business in the store, yesterday. What's he doing now? You guessed it, real estate.

How's the real estate market? I ask, innocently.

Oh, he says, we'll never again have the kind of run up we've had the last two years. We're just back to normal. Back to 2003. Anyone who didn't buy a how before then, is just out of luck... "permanently left out of the market."

After he left, I thought of a couple of responses to that.

1.) We aren't the same town we were in 2003. How many houses have been built or are being built? How many more agents, and construction workers and lawn care guys do we have?

2.) If you are someone who has just been told that you are "permanently" priced out of the market, why would you stick around?

It's not the actual number of houses that sell that matter, it's the number of houses relative to the infrastructure. A bubble doesn't just peak out at some realistically maximum number, it goes flying right over the top and just keeps going. If we were selling extraordinary numbers of houses, that just encourages everyone to keep building. We don't have a building czar who says, "Well, we sold 2000 houses at the peak, so realistically, we shouldn't build more than 2500 houses." Every builder will ramp up his own levels of building and it will jump to 2500 then 3000 then 3500. (These are made up figures.....) We'll have a huge bulge of housing coming on the market, just as sales are beginning to slow down.

On the other hand, there seem to be a lot of bubble believers that seem to think that houses prices are going to plummet. Does that really happen? Isn't it more likely prices will stagnate or go down slightly?

Thing is, it isn't necessary for housing prices to plummet for us to have a disaster. Prices falling even a little bit will be disastrous enough, thank you.

The real problem, as I see it, is that houses will stop selling at any price. Or to be more precises, houses will be cherry picked.

If you are a financially solvent, savvy buyer, and you want to come to Bend, you may still pay fairly high for a nice house -- but you are going to have a wide range of choice.

If you are a greedy, short-sighted developer, who has built a huge house on a tiny lot, without much flare (put in a porch and call it a bungelow) or quality (sure it looks like every other house on the street but those haves have been selling, so why not?) , but with the requisite number of square feet and marble counter tops, and you are competing against a builder who had built an appropriate sized house with a view and nicely landscaped and designed, and it costs slightly more, the nicer house will probably sell.

Even today, with the sport card market all but extinct, new sports cards prices haven't come down. In fact, they're more expensive than ever . They hardly ever sell, but when they do, they sell to a serious collector who is willing to pay a higher price for quality. The sports cards the serious collectors don't want -- it doesn't matter How Cheap They Get, they never sell.

We'll be lucky if prices actually go down, and the market responds to that. I think it's more likely that housing prices won't go down, but that houses will simply sit empty. Yes, there will be foreclosures, and yes there will be desperate sellers, but mostly there will be some real estate developers who if they didn't sell their houses in 2004-2007 are "permanently left out of the market."

I have about as much sympathy for them, as they seem to have for all the buyers who were left out.