Last week's column examined the Home Price Index, which showed that only five states have experienced price declines in the past year. The index suggested that the areas most vulnerable to declines were those that had excessive price increases during the recent housing boom.

Here are some questions I commonly receive about real estate and home prices:

Q: Isn't it smart to buy when prices are low and sell when prices are high? And if so, why would anyone want to buy now, when prices are at their highest?

A: You are confusing long-term investing in real estate with short-term speculation in the stock market. You suggest that it's best to "time the market" in real estate, taking advantage of cyclical swings in price. This is not real estate investing, it's gambling.

Neither you nor anyone else can tell when home values may see a decline in the Atlanta area, although if that were to happen, it would be rare. Instead, I recommend that you think of real estate as a long-term investment. Real estate is a slow, steady performer that tends to increase in value over long periods of time.

When you buy a home, you certainly hope that it will be worth more later than you paid today. Historically, that has happened for many years. Of course, there are no guarantees on any investment.

Q: Does it make sense to postpone my home-buying plans until prices stabilize?

A: Not necessarily. Interest rates for loans under $417,000 recently dropped to very affordable levels, and builders have realized they must price homes competitively, or they just won't sell.

That makes this a buyer's market, but there is no guarantee this will last. In fact, I can almost guarantee that it will change.

Q: What circumstances might cause this buyer's market to change?

A: If the economy were to pick up steam and interest rates fell, it's likely that home-buying activity would increase as well. That could cause prices to firm up and sellers to become less flexible.

Q: So does it make sense to buy now, while sellers are anxious?

A: If we think of real estate as a long-term investment, it makes the most sense to consider buying when you have a long-term need to do so. For example, if you recently got married and plan to live in this area for at least several years, it makes sense to consider buying a house.

You've got to live somewhere, and there are significant tax advantages to owning over renting. In addition, there is a good chance that your home will be worth more in the future than it is today.

Q: You seem to think that real estate will always go up in value. Is that the basis of your advice?

A: Reliable statistics have only been kept for about 30 years. In that time period, there has never been a nationwide year-over-year price decline, although they have declined regionally. Even those proved temporary.

Q: Isn't it possible this is the beginning of a sea change in home values, with prices declining year after year?

A: I suppose anything is possible, but no nationally respected economist has suggested this is the beginning of the end for real estate. Instead, most see the economy in reasonably good condition, with low unemployment and increasing personal income. This typically leads to a sound real estate market.

Q: What about this mortgage melt-down and the huge increase in the number of foreclosures? Won't those things drive down prices everywhere?

A: The tightening of credit guidelines was an overdue move by lenders to make sure that future borrowers are better able to make their monthly payments.

And the number of homes being advertised as going into the foreclosure process is a tiny fraction of the overall home loan portfolio held by bankers in this country. The vast, vast majority of home loans are well-secured and are being paid on time.

Find more articles by John Adams online at ajchomefinder.com.