NEW YORK (MONEY Magazine) - If you live in a hot real estate market and you're buying or selling a home, or just perusing the Sunday classifieds and quickly tallying your growing net worth, you have to wonder: Can real estate keep going, or is this Nasdaq 5000 all over again? Our forecast: It'll keep going, albeit at a tempered pace.

Don't bet on further 20 percent gains in 2005. But don't bet on a collapse either. If price declines do occur, they may well happen where you'd least expect.

Even the housing bulls are no longer raging. The perennially optimistic National Association of Realtors predicts 5 percent gains on average this year.

Among the bears, count Yale University economist Robert Shiller, who foretold the March 2000 bursting of the stock market bubble in his book "Irrational Exuberance." "This is the biggest real estate bubble we've ever seen," says Shiller.

He expects widespread declines in home values, maybe not in 2005 but soon enough, because prices have become untethered from incomes: Median home prices are up 35 percent since 2000, while wages are up just 8 percent. Shiller is particularly worried about Southern California, where prices have doubled in three years.

The biggest red flag may be homeowners' expectations. When Shiller and his research partner, Karl Case of Wellesley College, surveyed markets in Boston, L.A., Milwaukee and San Francisco in 2003, they found that the typical homeowner expected his property to appreciate 14.7 percent a year over the next 10 years. Now that's irrational exuberance.

But that doesn't mean the gains of recent years were nuts. They were simply the result of a long-term decline in interest rates that made home ownership more affordable. That brought into the market new buyers who in turn bid up prices.

The typical family today spends just 19 percent of household income on mortgage payments. That compares with 22 percent in 1990 and 31 percent in 1980 -- when mortgage rates averaged nearly 14 percent. Yes, mortgage rates are moving up from their historical lows, but not as much as bears had feared. And the outlook is for modest interest-rate increases at most.

Case, in contrast to his partner, doubts that home prices will fall. The major markets are overpriced and demand will soften, he concedes, but he thinks the correction will take the form of a long period of flat prices, not declines.

His rationale? "Sellers hold out." If you're sitting on a 5.5 percent mortgage at a time when new mortgages cost 7 percent, waiting out the market makes sense if you're not under pressure to move.

"Of course," says Case, "all bets are off if things get rocky on the economic side."

As Case sees it, unemployment, not overexuberance, is real estate's biggest risk factor. What doomed Houston 20 years ago wasn't so much wild speculation -- though there was plenty of that -- but the cratering of the Texas oil industry. In California, the 13 percent decline in home prices between 1990 and 1995 coincided with a 35 percent jump in the unemployment rate.

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All this is why Freddie Mac economist Frank Nothaft thinks today's most vulnerable markets are not in high-priced coastal areas but in states like Ohio and Michigan, which are losing manufacturing jobs.

Bottom line: Don't buy if you're just looking for a big score. But don't be paralyzed by fear of a crash. The real estate market is no Nasdaq. And your house is no Net stock.