But what about now? If you're thinking about selling "by owner," is now a good time to put your home on the market? If you're thinking of buying, whether directly from a seller or through an agent, is now a good time to jump in? Will the market hold? Or have we peaked and has the "bubble burst?"

These are all legitimate questions that both buyers and sellers should ask. However, the answers are not always easy.

One area that is often a good prognosticator of the real estate market is the mortgage interest rate. When rates go up, it becomes more expensive for buyers to purchase, hence sales (and ultimately prices) tend to decline. When mortgage interest rates go down, it makes it less costly to get a loan, thus easier for buyers to purchase, and as a result, sales volume increases (and ultimately prices tend to go up). So, how are mortgage rates doing?

Although the Federal Reserve has been hiking short term interest rates for many months, the interest rate for mortgages has actually declined! Last week Freddie Mac, one of the two super-secondary lenders (Fannie Mae being the other) released statistics indicating that for the fourth straight week in a row, rates on the 30-year fixed-rate mortgage declined, down to 5.78 percent from 5.8 percent the previous week. (Freddie Mac assumes .5 to .6 points on all loan average quotes.)

The decline was across the board:
30-year Mortgage: 5.78, previous week: 5.8
15-year Mortgage: 5.33, previous week: 5.36
1-year Adjustable: 4.21, previous week: 4.26
5-year Hybrid: 5.2, previous week: 5.22

Even more remarkable is the fact that a year ago the 30-year mortgage was at 6.01 percent, the 15-year mortgage was at 5.35 and the 1-year ARM was at 3.75. (Hybrid mortgages, which have a 5-year fixed rate, then switch to 1-year adjustables, don't have a long enough track record to give previous year's quotes.) Note: These rates change weekly and new rates could be in effect by the time you read this.

What this all means is that the good times for sellers are likely to continue, at least for awhile. Lower mortgage interest rates make it easier for buyers to qualify for bigger loans. And, as noted, that translates into more sales... and often higher prices.

Buyers should also be happy, because it will cost them less to purchase. Unfortunately, as noted above, the savings are often quickly absorbed by higher home prices in a heated market. It's also important to note that it's mostly the low-end to middle of the residential market that's affected. The high-end homes, those going for more than a million dollars, are less affected by interest rate fluctuations (apparently because high-end home buyers have much more cash to put down).

TIP

Many economists believe that mortgage interest rates will soon rise. However, they disagree over how high. The consensus seems to be they'll reach between 6.5 and 7 percent by the end of the year. However, declining gas prices and a heated economy could boost them, while increased gas prices and a slower economy could knock them back.