No one will deny that southeastern Florida real estate is hot. Pre-existing home sales in Miami, Miami Beach and Fort Lauderdale have proven to be a good investment, outperforming since 2000 the S&P 500, a broad index of U.S. stocks. Miami housing prices are outpacing the top 20 metropolitan areas and the nation as a whole, according to the National Association of Realtors, a U.S. industry association.

During the past three years alone, home prices rose 92% in Miami-Fort Lauderdale. Among the top 20 city areas, home values rose 79%, while the nation aver aged 32%. A home in southeastern Florida worth $145,000 in 2000 was worth $371,600 five years later, according to the realtors.

That doesn't include the red-hot presale market, which attracts speculators like moths to a flame. In the City of Miami alone, not including Miami Beach, 63,776 residential and condo units have been approved or are in some preliminary development phase. During the past 10 years, comparatively, just 9,250 units were completed.

Given these figures, few who live here or have visited can escape idle talk of a bubble. Yet realtors are standing firm: They say the market won't collapse at all. Prices will cool off a bit, they argue, but are likely to stay on the rise for the long term. That's because many buyers are Latin Americans investing in second homes, not speculating, says Gustavo Lumer, a Miami real-estate broker who caters to Latin American buyers, especially from Argentina and Uruguay.

Part of the picture, too, is rich European buyers looking for a bit of sun with their investing. Real housing prices increased in the United States by 27% from 1995 to 2002, according to the Economist magazine's index of world home values. That's far less appreciation than in countries like Spain, up 58%, or Britian, up 89%.

U.S. baby boomers on the cusp of retirement also likely will continue to head toward sunny climes. According to the U.S. Census Bureau, Florida will overtake New York and become the third most-populous state in the country by 2030, when the population will have jumped by 80% to 29 million. In fact, Florida, Texas and California alone will account for one-half of the total U.S. population in just 25 years, according to the government. Surely all those people are going to need a place to hang their hats. "That by itself will keep the prices going up and up," says Lumer.

With any bull market, though, corrections are inevitable, and that is perhaps already going on. In November 2005, national new-home sales fell by 11.3% from the previous month, the sharpest drop in 12 years--although October was the hottest month in years at 1.4 million homes sold. By the time 2005 final numbers come in, the market still will be healthy, according to the U.S. Commerce Department. Real-estate lawyer Jean-Charles Dibbs, at Shutts & Bowen in Miami, says he has seen clients from Latin America act with a tittle more caution these days. They are asking for more due diligence, for instance, on the developers of projects in which they are considering investing. "They are still buying, but they might purchase two or three properties these days instead of four or five," Dibbs says.

Recession. Whether or not Miami grows, the U.S. economy will enter a recession sometime between 2008 and 2011, says John Calverley, chief economist and strategist for American Express Bank. A growing oversupply of housing coming on top of a shrinking economy could exacerbate that recession, making it as severe as the one in 1990 and dwarfing the economic slowdown of 2002. One thing is clear: Supply is growing. Home inventories in November rose 1.2% from October to a 19-year high to 2.90 million homes for sale, according to the U.S. realtors group.

It is very easy to equate the continuing rise in home values with the spectacular rise in stock prices during the late '90's. To see parallels causes speculation about the possibility of a house price "bubble" that will burst, resulting in the kind of dramatic declines in value that have devastated the stock market.

Let me say once and for all, the speculation about a "bubble" is no more than a superficial analysis of rising home prices. Any parallels between stock prices and home prices stem from the erroneous notion that the stock market and the housing market are comparable and will behave in similar ways. Homes are not stocks or commodities. Apples are not oranges.

Most people buy homes for far different reasons than they do stocks or other financial instruments. Perhaps most important, a house provides a family with a place to live. It is not just another piece of paper to be filed away and forgotten.

Yes, there is an "investment" factor involved, but homes and stocks perform very differently and are subject to very different influences. A home is a relatively stable investment and most homebuyers treat it as such. It probably will not earn the spectacular returns sometimes generated by other financial vehicles. But a home is also unlikely to show the dramatic declines that are often associated with other investments.

Every year, more than a million new households are being formed. For the foreseeable future, builders will have to construct about 1.6 million new homes annually just to meet the needs generated by population growth and new household formations.

Like politics, the, housing market is really a local phenomenon. The high housing values in certain metropolitan areas, are a result of the imbalances between supply and demand caused by growth restrictions that have limited the availability of developable land.

Eventually, interest rates will begin to gradually rise. This will have an effect on housing value, but nothing dramatic. The increase in home prices may slow, but the housing market will not undergo anything remotely like the volatility that the stock market is currently experiencing.

Prices for construction labor and materials continue to increase, and growth and land use restraints are driving up the prices of building lots - with little relief in sight. For the so-called housing "bubble" to burst, for home values to decline dramatically, the cost of building a home would have to decline dramatically. And given building costs and land use restraints, that is very unlikely.

The tax benefits that apply only to housing. make it a very good, longterm investment, even if values increase only slowly. Mortgage interest and property taxes are deductible, the value of housing services generated by homes is not taxable, and profits of up to $500,000 on the sale of a principal residence are excluded from tax on capital gains. These benefits favor keeping a home rather than buying and selling homes quickly and often.

Unlike stocks - which can be purchased and sold in minutes - a home is a purchase that typically takes careful deliberation and a significant amount of time.

People buying homes examine all of the alternatives, everything from the style of house available to the test scores of local schools, before making a decision.

And once they have made the commitment to a home and neighborhood and moved into the home of their choice, buyers are unlikely to turn around and repeat the process immediately...or repeatedly.

This is not to say that home prices cannot decline.

Occasionally, local markets may experience stagnant home prices - or even declines - if a severe economic setback causes housing demand to weaken in a particular area or region.

On a national basis, home values have never once shown an annual decrease. For this to occur, the country would have to be in very dire economic straits indeed.

Traditionally African Americans have valued real estate as the best investment around, but according to the authors of the Ariel/Schwab Black Investor Survey, it may not be the best investment vehicle for retirement.

This year's survey revealed that 61% of blacks and 51% of whites saw real estate as the best investment overall. This marks the first time the majority of both black and white investors polled in the survey preferred real estate over all other investments. With interest rates beginning to rise again, there is concern that African Americans in particular may be shying away from other investments in favor of real estate at a time when property values may begin to decline.

"[Real estate] is cyclical, just like the stock market, so the danger is that [African Americans] will get too optimistic and forget that it is an asset class," says Carla Foster, vice president and director of the African American Investor Services program at Charles Schwab. Foster stresses that real estate "may be a part of an overall investment portfolio, but it shouldn't be the only part."

Mellody Hobson, president of Ariel Capital Management L.L.C. points out that one reason investors have shifted toward real estate is because of the phenomenal gains it has made over the last few years. The National Association of Realtors expects home sales to break last year's record of 6.1 million, and they project price increases of 5.4%. Over the last three years, the average home has appreciated, but Hobson cautions that this growth has been fueled by historically low mortgage loan rates and very aggressive mortgage products that offer 0% down or even more than 100% of the home's value to pay for repairs and upgrades. Those who couldn't afford homes before took advantage of these programs, and if interest rates spike too high, those homeowners may find themselves with more mortgage than they can afford.

"The idea that small ticks in interest rates will impact your mortgage payment and ultimately your monthly budget is something that has concerned me for quite a long time," Hobson says.

Hobson also notes that the emphasis African Americans put on real estate may be misplaced because "typically, we don't experience the same increases in real estate value as our white counterparts in other communities. That is problematic."

Both Foster and Hobson stress that you don't want to be too dependent on any one investment for your retirement. Diversification is the key.

"[We want] people to understand that [real estate] is one piece of an overall wealth-building strategy," says Hobson. "It has boom and bust cycles just like the stock market

The stock market stresses me out, but I'd like a higher return than the 2 percent I'm currently earning in bank certificates of deposit (CDs). What about investing in real estate?

Truth is, there's no investment that doesn't involve some risk. That's the bottom line. Your concerns about the stock market's recent deep losses and unsettling gyrations are well-founded, but don't rule out the market completely, especially if you're young. Over a period of 20 years, the stock market generally gives an investor a return in the 9-to-11-percent range. That's why to build wealth aggressively for the long term, you should put at least some of your funds in the stock market. The key is diversification--spreading funds across several different types of investments. This helps keep your financial boat afloat in rough waters.

Real estate may appeal to you as an investment because you can buy, rent and manage the property yourself, and that's ultimate control. You can also decide that you'll be a real-estate investor, not a landlord, and hire a property manager so you don't get calls at midnight when the furnace goes out. Financial specialist Mike Tiret of Tiret & Company, CPA's in California, says, "Real estate is a great way to go, but you must invest money you won't need to use for at least ten years." He also warns that "even the real-estate market has periods when it goes down." The California realty market, for example, declined for nearly eight years during the mid-1980's and early 1990's.

If you like the idea of real estate as an investment but can't afford to buy and hold another piece of property in addition to your own home, check out nonpublicly traded real-estate-investment trusts, or REITs. The companies that run these trusts use investors' money to buy lots of property and typically pay dividends of 7 percent to 8 percent. The upside: You see far less volatility, because these REITs are not publicly traded--that is, not tied to the stock market. The downside: Your money's tied up for ten years, and if the real-estate market should collapse, so does your investment.

I've managed to hold on to my job during a series of layoffs at my company. I don't know what could happen next, but I want to be prepared. Fortunately I have no debt; I don't even have any credit cards. But my savings are pretty modest. How much of a cushion do I need to tough out a potential job loss?

Good for you that you have no debt. But you do need credit as well as cash for a cushion against harder times. Many people don't understand that you don't actually have a good credit rating until you use credit and pay what you owed on time. So not only should you put away enough savings to cover four to six months of fixed living expenses--rent or mortgage, food, utilities and transportation--but you also would be wise to apply for a credit card. Get one that charges no annual fee and the lowest possible annual percentage rate; you can shop for the best deals on bankrate.com. Use it responsibly to establish a good credit record. And be sure to forego the credit-card insurance many banks peddle these days. Although the insurance costs pennies per $100 of your credit balance, in the event of unemployment or disability, it only pays your minimum balance. The insurance doesn't pay off your entire debt, so this coverage can be costly over time.