Real Estate Prices Near 2006 Levels or Are They?

A more likely scenario is that the collapse of the bubbles in areas like Denver and the Bay Area will drag down real estate prices nationwide and further depress the market. A real estate market collapse is likely, but it will not be a bubble; instead, it will be deflation as housing costs fall because of lower demand. The factor most likely to trigger that event would be an increase in mortgage interest rates.