A rare peek at Homeland Security's files on travelers
Originally Posted by: Sean O'Neill, Monday, Dec 22, 2008, 12:12 PM

http://current.newsweek.com/budgettravel/2008/12/whats_in_your_government_trave.html?wpisrc=newsletter

The oversize white envelope bore the blue logo of the Department of Homeland Security. Inside, I found 20 photocopies of the government's records on my international travels. Every overseas trip I've taken since 2001 was noted.

I had requested the files after I had heard that the government tracks "passenger activity." Starting in the mid-1990s, many airlines handed over passenger records. Since 2002, the government has mandated that the commercial airlines deliver this information routinely and electronically.

A passenger record typically includes the name of the person traveling, the name of the person who submitted the information while arranging the trip, and details about how the ticket was bought, according to documents published by the Department of Homeland Security. Records are made for citizens and non-citizens who cross our borders. An agent from U.S. Customs and Border Protection can generate a travel history for any traveler with a few keystrokes on a computer. Officials use the information to prevent terrorism, acts of organized crime, and other illegal activity.

I had been curious about what's in my travel dossier, so I made a Freedom of Information Act (FOIA) request for a copy. I'm posting here a few sample pages of what officials sent me. My biggest surprise was that the Internet Protocol (I.P.) address of the computer used to buy my tickets via a Web agency was noted. On the first document image posted here, I've circled in red the I.P. address of the computer used to buy my pair of airline tickets.
[An I.P. address is assigned to every computer on the Internet. Each time that computer sends an e-mail—or is used to make a purchase via a Web browser—it has to reveal its I.P. address, which tells its geographic location.]

The rest of my file contained details about my ticketed itineraries, the amount I paid for tickets, and the airports I passed through overseas. My credit card number was not listed, nor were any hotels I've visited. In two cases, the basic identifying information about my traveling companion (whose ticket was part of the same purchase as mine) was included in the file. Perhaps that information was included by mistake.

Some sections of my documents were blacked out by an official. Presumably, this information contains material that is classified because it would reveal the inner workings of law enforcement.

I have grayed out other parts of the documents because they contain information, such as my passport number, that I'd rather not share. The parts I've blocked out are colored gray to distinguish from the government censor's black marker. Here's the lowdown on the records.
The commercial airlines send these passenger records to Customs and Border Protection, an agency within the Department of Homeland Security. Computers match the information with the databases of federal departments, such as Treasury, Agriculture, and Homeland Security. Computers uncover links between known and previously unidentified terrorists or terrorist suspects, as well as suspicious or irregular travel patterns. Some of this information comes from foreign governments and law enforcement agencies. The data is also crosschecked with American state and local law enforcement agencies, which are tracking persons who have warrants out for their arrest or who are under restraining orders. The data is used not only to fight terrorism but also to prevent and combat acts of organized crime and other illegal activity. Officials use the information to help decide if a passenger needs to have additional screening. Case in point: After overseas trips, I've stood in lines at U.S. border checkpoints and had my passport swiped and my electronic file examined. A few times, something in my record has prompted officers to pull me over to a side room, where I have been asked additional questions. Sometimes I've had to clarify a missing middle initial. Other times, I have been referred to a secondary examination. (I've blogged about this before.)

When did this electronic data collection start? In 1999, U.S. Customs and Border Protection (then known as the U.S. Customs Service) began receiving passenger identification information electronically from certain air carriers on a voluntary basis, though some paper records were shared prior to that. A mandatory, automated program began about 6 years ago. Congress funds this Automated Targeting System's Passenger Screening Program to the tune of about $30 million a year.

How safe is your information? Regulations prohibit officials from sharing the records of any traveler—or the government's risk assessment of any traveler—with airlines or private companies. A record is kept for 15 years—unless it is linked to an investigation, in which case it can be kept indefinitely. Agency computers do not encrypt the data, but officials insist that other measures—both physical and electronic—safeguard our records.

I wonder if the government's data collecting is relevant and necessary to accomplish the agency's purpose in protecting our borders. The volume of data collected, and the rate at which the records is growing and being shared with officials nationwide, suggests that the potential for misuse could soar out of hand. Others may wonder if the efforts are effective. For instance, I asked security expert Bruce Schneider about the Feds' efforts to track passenger activity, and he responded by e-mail:

"I think it's a waste of time. There's this myth that we can pick terrorists out of the crowd if we only knew more information."

On the other hand, some people may find it reassuring that the government is using technology to keep our borders safe. Oh, one more thing: Are your records worth seeing? Maybe not, unless you've been experiencing a problem crossing our nation's borders. For one thing, the records are a bit dull. In my file, for instance, officials had blacked out the (presumably) most fascinating parts, which were about how officials assessed my risk profile. What's more, the records are mainly limited to information that airline and passport control officials have collected, so you probably won't be surprised by anything you read in them. Lastly, there may be a cost. While there was no charge to me when I requested my records, you might charged a fee of up to $50 if there is difficulty in obtaining your records. Of course, there's a cost to taxpayers and to our nation's security resources whenever a request is filed, too.

However, if you are being detained at the border or if you suspect a problem with your records, then by all means request a copy. U.S. Customs and Border Protection is required by law to make your records available to you, with some exceptions. Your request must be made in writing on paper and be signed by you. Ask to see the "information relating to me in the Automated Targeting System." Say that your request is "made pursuant to the Freedom of Information Act, as amended (5 U.S.C. 552)." Add that you wish to have a copy of your records made and mailed to you without first inspecting them. Your letter should, obviously, give reasonably sufficient detail to enable an official to find your record. So supply your passport number and mailing address. Put a date on your letter and make a copy for your own records. On your envelope, you should conspicuously print the words “FOIA Request." It should be addressed to “Freedom of Information Act Request,” U.S. Customs Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229. Be patient. I had wait for up to a year to receive a copy of my records. Then if you believe there's an error in your record, ask for a correction by writing a letter to the Customer Satisfaction Unit, Office of Field Operations, U.S. Customs and Border Protection, Room 5.5C, 1300 Pennsylvania Avenue, N.W., Washington, D.C. 20229.

2009 to Arrive Not a Second Too Soon- Yahoo.com

http://news.yahoo.com/s/space/20081226/sc_space/2009toarrivenotasecondtoosoon

Joe Rao Skywatching Columnist Space.com – Fri Dec 26, 11:33 am ET

Wait a second. The start of next year will be delayed by circumstances beyond everyone's control. Time will stand still for one second on New Year's Eve, as we ring in the New Year on that Wednesday night. As a result, you'll have an extra second to celebrate because a "Leap Second" will be added to 2008 to let a lagging Earth catch up to super-accurate clocks.

By international agreement, the world's timekeepers, in order to keep their official atomic clocks in step with the world's irregular but gradually slowing rotation, have decreed that a Leap Second be inserted between 2008 and 2009. The extra second, ordered by the world's nominal timekeeper, the International Earth Rotation and Reference Systems Service, will be marked officially at the stroke of midnight on Wednesday in Greenwich, England, the home of what is popularly known as Greenwich Mean Time (GMT) – Coordinated Universal Time (UTC) to the more technically inclined – the standard time for the planet.

So at precisely 23:59:60 at Greenwich, England, on New Year's Eve, there will be a one-second void before the onset of midnight and the start of the New Year. Wednesday will see the 24th Leap Second that has been needed since the practice was initiated in 1972, and will be the first in three years.

Keeping the Earth on time
Around the world, to satisfy the requirements of navigators, communication organizations and scientific groups, about 200 atomic clocks in over 50 national laboratories worldwide will be adjusted at local times corresponding to midnight to local times at Greenwich. On New Year's Eve, the master clock at the United States Naval Observatory will be adjusted at 6:59:60 p.m. EST, or 23:59:60 GMT.

The extra second is needed to keep the world's clocks in time with the rotation of the planet. Time measured by the rotation of the Earth is not uniform when compared to time kept by atomic clocks. Today's atomic clocks have an inaccuracy of less than one second in 200 million years.

But for various reasons – the sloshing molten core, the rolling of the oceans, the melting of polar ice and the effects of solar and lunar gravity – our planet rotates on its axis at irregular rates, and on average has been falling behind atomic time at a rate of about two milliseconds per day. It now trails the official clock by about six-tenths of a second.

As a result of this difference, atomic clocks can get out of sync with the Earth and periodically have to be adjusted. Since it's the atomic clocks that are used to set all other clocks, a Leap Second has to be added from time to time to make up the difference.

Adding the extra second between 23:59:59 on Dec. 31 and midnight on Jan. 1 will put Mother Earth about four-tenths of a second ahead of the clock, giving her a bit of a head start as 2009 begins.

Who said chivalry is dead?

How to see and hear the extra second
Today many retailers market radio clocks as "atomic clocks"; though the radio signals they receive usually come from true atomic clocks, they are not atomic clocks themselves. Typical radio "atomic clocks" require placement in a location with a relatively unobstructed atmospheric path to the transmitter, perform synchronization once a day during the night-time, and need reasonably good atmospheric conditions to receive the time signals.

If you own such a device, you might want to watch what your clock displays just before 0 hours GMT, Jan. 1, which corresponds to 7 p.m. Eastern standard time on Dec. 31. The minute beginning at 6:59 p.m. EST will contain 61 seconds. When a Leap Second was added in 2005, I watched my own clock closely during that minute as the seconds ticked off. When the final second of that minute was reached, the number "59" flashed not once, but twice!If you don't have a radio clock, you can bring up a time display on your computer by going to: http://nist.time.gov/.

You can also listen for the Leap Second by tuning in to a shortwave time signal station. In North America, the "extra tick" can be heard by listening either to station WWV out of Fort Collins, CO (see:http://us.rd.yahoo.com/dailynews/space/sc_space/storytext/2009toarrivenotasecondtoosoon/30363607/SIG=116qvno87/*http:/tf.nist.gov/stations/wwv.html) at 2.5, 5, 10, 15 and 20 megahertz or CHU in Ottawa, Canada (see: http://us.rd.yahoo.com/dailynews/space/sc_space/storytext/2009toarrivenotasecondtoosoon/30363607/SIG=10rlfpbb7/*http:/tinyurl.com/y2wa2y) at 3330, 7335, and 14670 kilohertz.

A listing of shortwave time signal stations for other parts of the world can be found here.
Should you encounter poor reception, try preparing a seconds pendulum by hanging a small weight on a string about 39.1 inches (99.3 centimeters) in length. Adjust the string length beforehand until the swings exactly match the time signal ticks. If the beeps denoting the start of each minute occur at the left extreme of a swing before the final (GMT) minute of 2008, they will be heard at the right extremes thereafter. (Although the swing amplitude will be steadily dying down, this does not affect a free pendulum's oscillation period.)Ball Drop too early?By the time the transition from 2008 to 2009 arrives in North America the Leap Second will have already been inserted into the world's timescale.

But there was a bit of confusion about all this back in 1972 when the first Leap Second to be inserted on a New Year's Eve took place. An astronomer at New York's Hayden Planetarium took a phone call that day from the engineer who was assigned to drop the famous illuminated ball in Times Square (in those days, the ball was slowly lowered using an old fashioned rope and pulley). "This can affect my job," he reportedly said. "So I want to be sure I don't drop that thing one second too soon!"

Regardless of how you use your extra second, just keep this one indisputable fact in mind: Whenever you note the time on the clock, realize that it is now – right now – later than it has ever been.

Happy New Year!

Online Sky Maps and More

Sky Calendar & Moon Phases

Astrophotography 101

Joe Rao serves as an instructor and guest lecturer at New York's Hayden Planetarium. He writes about astronomy for The New York Times and other publications, and he is also an on-camera meteorologist for News 12 Westchester, New York.

Original Story: 2009 to Arrive Not a Second Too Soon

Curious about what impact a remodel project will have on your home’s value?

This article gives the 2008 report on Cost vs. Value for home repair and improvement projects as compiled by Remodeling magazine and summarized in Realtor magazine.

http://www.realtor.org/rmohome_and_design/articles/2008/0812_costvsvalue_2008?id=bcaa4b804bfb44b98fe18f66fe42bfc9&wcm_page.resetall=true&cache=none&contentcache=none&connectorcache=none&srv=page

A Rush Into Refinancing as Mortgage Rates Fall
http://www.nytimes.com/2008/12/04/business/04refi.html?_r=2&th&emc=th

By TARA SIEGEL BERNARD

Published: December 3, 2008 in www.nytimes.com


The housing market may finally be getting some relief, with lower mortgage rates already encouraging refinancing and Treasury officials considering ways to entice new buyers.

Last week, the Federal Reserve announced that it would buy $500 billion in mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Mortgage rates immediately dropped, and that led to a surge in mortgage refinancing activity for the week — even with the Thanksgiving holiday.

On Wednesday, people close to the discussions said that the Treasury had been talking with Fannie Mae and Freddie Mac about ways to drive down mortgage rates to as low as 4.5 percent. That rate is about a percentage point lower than the going rates for such loans.

Any government efforts to jump-start the housing market have a number of obstacles, the biggest being borrowers’ worries that the economic downturn will affect them. Meanwhile the best interest rates will go only to borrowers in sound financial shape. And even if the efforts go as planned, they may not help the most distressed homeowners.

Still, the jump in refinancing activity showed that there was an appetite that could be whetted by lower rates. The Mortgage Bankers Association said its refinance index, which measures refinancing activity, tripled to 3,802.8 last week from the week before. The index was also 37.7 percent higher than in the same week a year ago. It was the largest increase in refinance applications in the survey’s 18-year history, though it does not measure how many applications become loans.

Refinancing activity accounted for 69.1 percent of all mortgage applications submitted last week, up from 49.3 percent the week before.

“We did quadruple our normal volume last week,” said Bob Walters, chief economist of Quicken Loans. “We had loan officers staying past midnight to get back to all of the people that had been calling. There is still a silent majority of people who can refinance and qualify.”
Callers cited a variety of reasons for their new interest in refinancing, mortgage lenders said. But the main reason was that they wanted to lock in a lower mortgage rate and reduce their monthly costs in case they fell victim to the economic downturn. Others were looking to extract cash to pay down more expensive credit card debt, the lenders said, and some were trying to trade in their adjustable-rate mortgages for a fixed rate.

Annie Lu, 30, a nurse practitioner, said she called about refinancing when she heard that the economy was officially in a recession. She and her husband bought their house in Brooklyn about three years ago with a mortgage rate of 6.25 percent. She is hoping to qualify for a rate almost a percentage point lower. “It is good to prepare for the worst, and nobody minds saving as much as we can,” she said.

The Treasury’s consideration of additional efforts to breathe life into the housing market was first reported on The Wall Street Journal’s Web site. People familiar with the Treasury’s plans said that Treasury officials had met with top executives at Fannie and Freddie last week but that neither had been notified that any steps were taken toward putting such a plan into effect. By one account, the new program would be available only to home buyers, not to people who simply want to refinance their existing loan at a lower rate.

But those looking to refinance are already eyeing the lower rates. “Borrowers with reasonably good credit and a home that hasn’t lost too much value are going to find mortgage money plentiful and readily available,” said Brad Blackwell, national sales manager at Wells Fargo Home Mortgage.

As rates drop, more people, in theory, qualify for loans because their monthly principal and interest payments will be lower. But to qualify for the best rates, borrowers need to have impeccable credit — or a credit score of 720 or higher — as well as at least 10 to 20 percent of equity in their homes.

And while experts said they were heartened by the pickup in activity, the overall number of refinancings this year was expected to be only slightly more than a quarter of the volume at the height of the housing boom in 2003.

“It is not going to spike up rapidly or anywhere near as it has in the past because credit is still tight, the economy is still weak and there are fewer people that could refinance now than could before,” said Celia Chen, senior director of housing economics at Moody’s Economy.com. “But the decline in rates will help those that can.”

For all the renewed interest in refinancing, about 12 million households, or 15 percent of owners of single-family homes, are not eligible. Their mortgages exceed the value of their home, Ms. Chen said.

Meanwhile, entire categories of loan products have been eliminated. Subprime loans are not available along with stated income loans, where borrowers do not have to fully document their income. That has limited the options for many small-business owners and other self-employed individuals. People with inconsistent or unpredictable incomes, like those who rely on commissions, are also affected.

“You can imagine how many inquiries we get where we are done just as soon as we are done talking,” said Rick L. Dunham, vice president of Impact Mortgage Network in Mesa, Ariz., whose clients include small-business owners as well as individuals whose mortgages exceed the value of their home. “So we go to the next step and say, ‘O.K., your options are loan modification, short sale or nothing at all.’ ”

Credit standards have also tightened, which has made it more expensive — often prohibitively so — for many individuals to get a loan. Generally, individuals need a credit score of 620 to qualify for a loan, but they have to pay a fee equivalent to about 2.75 percent of the loan amount, which can translate into a rate of about 1 percentage point higher than the best rate available. In some cases, these individuals can get a better deal through the Federal Housing Administration.
“For borrowers on the fringe — low credit score, erratic documentation, high debt loads, et cetera — mortgage money may actually be available but the other terms and conditions that need to be jumped to have access to that financing make it prohibitive,” said Keith Gumbinger, vice president of the financial publisher HSH Associates.

Javier and Irina Lattanzio were motivated to refinance by the potential for monthly savings. Their strong credit history enabled them to refinance the $800,000 mortgage on their four-bedroom Manhattan apartment to a rate of about 5.6 percent. But the Lattanzios had to pay $70,000 so that their loan would qualify for conforming mortgage rates. Jumbo mortgages remain, on average, a full percentage point higher.

Edmund L. Andrews and Charles Duhigg contributed reporting.

More Articles in Business » A version of this article appeared in print on December 4, 2008, on page B1 of the New York edition.

Wall Street Journal
DECEMBER 2, 2008, 9:06 A.M. ET
Cover Story
http://online.wsj.com/article_email/SB122764977315457619lMyQjAxMDI4MjA3MjYwNDI5Wj.html

The Future for Home Prices
Americans still see real estate as their best shot at wealth. It may be wishful thinking.
By JAMES R. HAGERTY


Over the past few years, Americans have had a brutal lesson in the risks of real estate. House prices have crashed more than 35% in some parts of the country, millions of people are losing their homes to foreclosure, and banks are failing.
The takeaway? Many Americans still see real estate as their best shot at wealth. In survey after survey, people expect prices to bounce back -- in some cases, as soon as six months from now.

Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won't bottom out before the second half of 2009, and some don't see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years.


Down the Road
And longer term? Over the next 10 to 20 years, housing economists expect prices will rise again -- but, on average, probably not nearly as much as they've averaged over the past decade. That isn't to say that some places won't experience booms (and busts). But, the experts say, you should generally expect house prices to rise just a bit more than inflation and roughly in line with household income.

Karl Case, an economics professor at Wellesley College whose name adorns the S&P Case-Shiller home-price indexes, has studied U.S. house prices going back to the 1890s. Over the long run, he says, home prices tend to increase on average at an inflation-adjusted rate of 2.5% to 3% a year, about the same as per capita income. He thinks that long-run pattern is likely to continue, despite the recent choppiness.

Other experts make similarly modest predictions. William Wheaton, a professor of economics and real estate at the Massachusetts Institute of Technology, says he expects house prices to increase at a rate roughly one percentage point higher than inflation over the long term. Celia Chen, director of housing economics at Moody's Economy.com, a research firm, expects house prices to increase an average of around 4% a year over the next couple of decades.
Some experts say it's a bad idea to count on your home rising in value at all. People should think of their own homes mainly as places to live, not as investments, advises Kenneth Rosen, chairman of the Fisher Center for Real Estate at the University of California, Berkeley. Sure, home mortgages provide tax benefits, and most homes appreciate in value over the long run, he says, but there is always risk.

For all of those forecasts, many Americans are undaunted. Consider three surveys, all from October.

In a poll of 2,000 adults, real-estate-data provider Zillow.com found that 61% believed the value of their home would either remain level or rise over the next six months. Another survey of more than 1,000 homeowners, sponsored by real-estate-services firm Realogy Corp., found that 91% thought that owning a home was the best long-term investment they could make. And an online survey of 5,000 people commissioned by Citigroup found that just 32% believed it was a good time to invest in stocks -- but 51% said it was a good time to buy a home.

"I just believe in real estate," says Jason Schram, a lawyer in Chicago who has bought two rental properties this year at what he considers fire-sale prices. "I've seen over and over people I know build wealth through rental real estate, and that's the path I intend taking, even though it's a bit bumpy at the moment."


Location, Location
So, as homeowners and buyers look ahead, what factors will determine whether their homes are really likely to rise in value, rather than just in their dreams? What are some of the bullish signs -- and some of the bearish ones?

In the long term, house prices are driven by fundamentals that are hard to predict: immigration, birth rates, the size and nature of households, and incomes. The trick is to figure out where job and income growth will be strongest and where immigrants and others will want to live.
William Frey, a demographer and senior fellow at the Brookings Institution, a think tank in Washington, says young people and immigrants are likely to flow to Florida, Georgia, the Carolinas, Tennessee, Virginia, Nevada, Arizona and some of the more affordable interior parts of California.

These areas generally have lower housing costs than the Pacific Coast or Northeast and job growth from modern industries and leisure businesses, he says. Areas with little immigration and low growth or falling populations are likely to include Michigan, Ohio, the Dakotas, Iowa, western Pennsylvania and upstate New York, Mr. Frey says.


Hit Parade
Newland Communities LLC, a San Diego-based planner and developer of neighborhoods, employs a full-time researcher to study long-term housing demand and ranks metro areas in terms of their growth prospects. Among those near the top of Newland's hit parade are Washington, D.C., Raleigh and Charlotte, N.C., Atlanta, Dallas, Houston, Phoenix and Las Vegas, says Robert McLeod, the developer's chief executive.

All of them, Newland believes, will keep growing because they have well-diversified regional economies and other attractions, including mild climates. With the exception of Washington, they all have fairly affordable housing costs. Washington has a highly educated work force, high incomes, a stable source of government-related jobs and rapidly expanding technology firms, Newland says.

"The older industrial cities are going to suffer" from shrinking employment and forbidding weather, says Mr. Rosen of the University of California. Some Sun Belt cities, including Atlanta, also could languish if traffic jams and sprawl ruin their charms, he says.
Among metro areas that Mr. Rosen expects to do well in the long run are Albuquerque, N.M.; Boise, Idaho; Salt Lake City; Seattle; Portland, Ore.; Denver and Colorado Springs, Colo. He says those places generally offer "urban vitality" and "easy access to outdoor activities" combined with affordable housing and good job-growth prospects from modern industries, such as biotechnology.

Still, just looking at population trends isn't enough. Prices in the crowded coastal areas tend to be more volatile, rising and then falling much faster during booms and busts than do inland areas, Mr. Case notes. Shortages of land and building restrictions make it hard for builders to respond quickly when demand for housing rises in coveted neighborhoods near the coasts; further inland, it's usually much easier to find vacant homes or land, and so sudden movements in prices are less likely.

For instance, despite rapid growth, home prices in Texas cities have tended to climb only gradually. Those cities typically have plenty of room to sprawl, and Texas regulates land use less strictly than many other states. Supply swells to meet demand.
Stephen Webster / Wonderful Machine


The Wonder Years
What's more, no one can assess the outlook for housing without considering the effects of 78 million aging baby boomers. For instance, some housing experts believe the boomers will be much less likely than their parents to settle for sun and golf in their retirement; they may prefer urban settings with lots of cultural life or to live nearer friends and families. That could mean higher demand -- and increased prices -- for housing in urban neighborhoods.
Most of this is just guesswork, though. "A lot of people have theories about the baby boomers," says Mr. Frey, the Brookings demographer, but boomers always have tended to confound expectations.

Dowell Myers, a professor of urban planning and demography at the University of Southern California, warns that the retirement of boomers over the next two decades is likely to depress house prices in many areas. As boomers relocate to retirement homes and cemeteries, there will be a lot more sellers than buyers in parts of the country, he says.
"It's going to really mess up the housing market," says Mr. Myers. He predicts that this "generational correction" will be larger and longer-lasting than the current slump.
To get a sense of the effects of aging boomers, Mr. Myers looks at the number of Americans 65 and over per 1,000 working-age people. He sees that number soaring to 318 in the year 2020 and 411 in 2030 from 238 in 2000.

Many people over 65 buy homes, of course, but as they get older they become more likely to sell than buy. People aged 75 to 79 are more than three times as likely to be sellers than buyers, Mr. Myers says.

In some areas, younger people will be happy to buy (and probably renovate) those boomer nests. The problem, Mr. Myers says, will be in places where lots of older people are selling and few young people are settling down. He says the effects will be strongest in the "coldest, most congested and most expensive states rather than the high-growth states of the South or West." Among the states where Mr. Myers sees downward pressure on prices within the next decade: Connecticut, Pennsylvania, New York and Massachusetts.

Of course, applying demographic trends to house-price forecasts can be hazardous. Economists N. Gregory Mankiw and David Weil predicted in a paper in 1989 that demographic trends would lead to a "substantial" fall in real, or inflation-adjusted, home prices over the next two decades "if the historical relation between housing demand and housing prices continues." They reasoned that baby boomers were coming to the end of their prime house-buying years and that the smaller baby-bust generation would bring lower demand for housing.
That warning proved, at a minimum, premature. Despite the recent drop, the average U.S. home price is up about 35% in real terms since the end of 1989, according to the Ofheo index. Messrs. Mankiw and Weil both declined to comment.

Few people who invest in housing have time to follow these academic debates. For nearly four decades, Rich Sommer and his wife, Carolyn, have been investing in rental properties in and near Stevens Point, Wis. Mr. Sommer describes real estate as a good way "to get rich slowly." He and his wife, both former schoolteachers, gradually have built their net worth from zero to around $2.5 million through their rental properties. They have dealt with countless plumbing emergencies, evicted deadbeats and even once had to clean up after a suicide in one of their properties.

Still, he hasn't been hit very hard by the real-estate crash, in part because the Midwest is much less vulnerable to booms and busts than coastal areas. When asked what he would do if someone handed him $1 million today, Mr. Sommer doesn't hesitate: He would put it into real estate.—


Mr. Hagerty is a staff reporter for The Wall Street Journal in Pittsburgh.

Write to James R. Hagerty at bob.hagerty@wsj.com