Q: I’ve noticed that when interest rates are low, prices are high and when rates go higher, sellers lower their price. And since interest rates have been low for awhile, homes seem to be a lot more expensive than they were a year or two ago.

Do you think the market has peaked in San Diego, California? Right after the September 11th incident, a 4-bedroom, 3-bath house cost $280,000 to $300,000. Now, you’ll spend that to buy a 2-bedroom, 2-bath house.

Finally, will home prices ever go down?

A: Prices are high in housing markets all over the country and it looks as though they may stay high or go higher for a couple of reasons. First, more people are moving to major metropolitan area. Interest rates have stayed low and finally, there are more first-time buyers entering the market.

What could cause prices to sink, albeit temporarily? Something would have to shake local confidence, like an oil crisis or some other catastrophe. Or, a local employer would have to close and fire a huge number of homeowners in one particular neighborhood. Or, an environmental problem would have to be discovered in a neighborhood (which could negatively affect home prices for years to come).

If prices are too high in the neighborhood you like, set your sites on a new location. Look to move to the outskirts of that neighborhood. You could be an “urban pioneer” and reap the benefits of your more. Or, buy a fixer upper. A final thought is to buy a two- or three-family home and rent out the other units.

Feb. 28, 2001.