A sign heralds homes for sale in Las Vegas' Silverado Ranch area. A report from a pair of California real-estate financing execs shows Nevada as a U.S. region in which housing prices have risen sharply. Photo by Ronda Churchill.

From casino workers on the Strip to financial analysts on Wall Street, the so-called "housing bubble" is popping up more and more as the center of conversation, an investment advisory newsletter editor notes.

Every homeowner, prospective buyer, analyst and armchair real estate expert has an opinion about where housing values are headed, said Doug Fabian, president of Fabian Wealth Strategies and editor of three investment advisory newsletters in California.

A report released last month by Fabian and Josh Lewis, first vice president at Santa Ana, Calif.-based Stearns Lending, shows that people with risky mortgages, no equity, big debt and no savings may be at risk of losing their homes if and when a housing market correction becomes reality.

"Sadly, many people will walk away from their homes with nothing but a black mark on their credit," Fabian said. "There is a universal belief that housing prices never go down, and history has proven that it's just not true. Prices can go down 30 percent over time after the housing bubble bursts."

The report, "Boom to Bust," will help real-estate owners prepare themselves and even profit in the wake of the downturn, Fabian said.

"This report is for regular homeowners to look at their position in the real estate market. Some people are in a great position and some people are in a poor position," he said. "Look at the changes that are coming. You don't want to get caught upside down in the real estate market when you're paying top dollar, especially with funny financing."

The price of real estate has been on a five-year tear as housing prices nationwide have appreciated sharply. The report shows the hottest housing regions are California, Nevada, Arizona, Florida and the Northeast. Housing prices in these regions have risen as much as 120 percent collectively since 2000, the report shows.

Fabian said trouble may be looming for the real estate market.

"Pressure is mounting in real estate prices and the ongoing surge is not only unsustainable, but downright dangerous," he wrote in the report. "Prominent economic experts from coast to coast and everywhere in between agree that we are in the final hours of a major bubble in the real estate markets."

Fabian believes that a significant correction is inevitable and will start to occur within the next 12 months.

Lewis, who's been in the Southern California mortgage industry for more than 10 years, believes the region could suffer as much as a 30 percent decline in housing prices over the next five to seven years after the initial downturn.

The report also finds:

j Nonowner occupants are now buying more than 25 percent of all homes.

j Households are allocating a greater percentage of income to housing than ever before.

j More houses are being purchased with no down payment. People are buying primarily because of the expectation of appreciation.

j The majority of today's loans involve some combination of adjustable-rate mortgages, interest only or negative amortization. This layered risk will result in a major increase in foreclosures, which will bring the total housing market down in value.

"It is true, and lots of lenders have been criticized for it, that some very liberal lending has taken place," said Bill Martin, president and chief executive officer of Nevada State Bank. "It has been my 40-year banking experience that departure from traditional lending standards when in a highly competitive market, especially in good times, prove to be invalid whenever there is tightening in the economy."

In 2002, interest-only loans, in which buyers pay only the interest and no principal, accounted for less than 20 percent of all home loans nationally. At the end of 2004, that figure had reached 70 percent.

Jim Cloyes, production manager of Direct Access Lending in Las Vegas, said he's done a lot of option ARMs over the last four years.

"Even with a minimum payment of interest only, the theory is you're protected when the house appreciates every year. Where you run into problems with interest-only is when you get upside down on the house," Cloyes said. "If they're not paying down the principal, they have no equity, so if they get in a bind and have to sell the house, they could actually have to come out of pocket."

Las Vegas, where the median price of a single-family, detached home was $321,550 in August, was spared from the list of the 20 least affordable U.S. housing markets in Fabian's report.

An affordability index based on how much of a house can be bought by someone earning the median income in that market placed Merced, Calif., at the top at 27.6 percent and West Palm Beach, Fla., at No. 20 at 73.1 percent.

The housing market continues to rise on the backs of the twin motivators of fear and greed, Fabian said.

"Fear is motivating buyers who are willing to jump in at all costs because they are certain the market is passing them by," he said. "If I don't buy now, I'll never be able to afford a house.

"On the opposite end of the spectrum, speculative buyers are driven by greed and big dreams of flipping properties for a huge profit a year or less down the road."

"Flippers" ride the wave of a rising housing market and profit from it, said Christopher Cagan, research director for Anaheim, Calif.-based First American Real Estate Solutions.

"But do they dominate or define a market? The answer depends on geographic size," he said. "At the county level, we have seen that flip sales did not dominate the overall markets as a percentage of total sales. In smaller local areas, flip sales can dominate the market."

In Las Vegas, Cagan showed that 52.3 percent of home sales in ZIP code 89119 were flipped within 24 months and 45.7 percent were flipped within 24 months in ZIP code 89147.

The easy money in investment real estate has already been made and cashed in, Fabian said.

"Warren Buffett just sold his home in Laguna Beach for $3.5 million. If there was more money to be made, Mr. Buffett would be sitting on the beach in Laguna instead of counting his profits," he said.

Among the dangers in the housing market is the increased use of adjustable-rate mortgages, Fabian said. In the past, ARMs were used as a tool to combat high interest rates. Now home buyers are using them as a way to afford a home.

"The vicious cycle of easy money and higher home prices keeps going round and round and where it will end, no one knows," Fabian said. "But it will end and the end will bring a lot of pain."