Ten signs of a real estate apocalypse

What about wars abroad, or concerns like bird flu, nuclear ambitions in Iran or conflict in Israel? In some cases, such as with Hurricane Katrina, what can be devastating to one region will have no impact — if not even a positive effect — on other areas.

"SARS in Asia is very negative for the Asian market and real estate in the markets where it occurs," she points out. "But it has no negative impact on the U.S. A beneficial impact is that it might, if anything, draw capital to the U.S. and lower interest rates." An increase in the threat of war could have the same result, as investors seek a safe harbor for their money.

On the other hand, a meaningful outbreak of avian flu in the U.S. would probably have a strongly adverse impact on the housing market, especially if it struck a major population center. Robert J. Shiller, an economist at Yale University and author of the book "Irrational Exuberance", which predicted the 2001 stock market bust and was recently updated to include real estate bubbles, notes that housing prices in the U.S. were on the decline in 1916. But a serious drop took place at the same time as the 1918 flu epidemic. "World War I and the flu were kind of coincided," he says. "It looks like that had a huge hit on housing prices — they were down 40 percent in real terms from 1912 to 1920."

But Shiller believes that the biggest potential market shifter is far less tangible than a tsunami, interest rate spike or other newsworthy event. "I think that most likely what would cause a big drop in real estate would be a change in public thinking," he says.

In October 1987, when the Dow Jones Industrial Index fell more than 22 percent in one day, nothing in particular seemed to be happening, he says. But investors had been adopting a new strategy called portfolio insurance, which meant there were large and sudden sell-offs when the market dipped. "It got everyone really primed to sell," he says.

The real estate boom in Florida in the 1920s collapsed partly because of the 1926 hurricane, which killed scores of people — but also because newspapers around the country started describing people who were buying land they had never seen, or that was under water.

Despite potential nightmare scenarios, though, for the most part, the economists and experts we spoke with seemed convinced of the overall resiliency of the U.S. housing market. As Wharton's Wachter points out: "Natural disasters are bad news, but not necessarily for real estate."

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