Shock is a natural physical reaction from something unexpected or extremely disconcerting. When you hear that "homes sold are down 27%", understand that markets can't keep climbing forever. At some point, they will stabilize and even fall to "normal" or "reactionary" levels. For example:

• If you keep up with this blog, you know that 2005 and 2006 were record years for Texas real estate as other national markets cooled.

• Texas is a very large state with a lot of opportunity. Out-of-state investors and builders realized this in 2005-2006 as bubbles in their local areas burst. Real estate speculators, relocating buyers and first-time buyers with sub-prime home loans were living it up.

• 2007 was a chain-reaction from bad news in California, Florida, Arizona, etc. The Sub-prime lending markets hit the breaks as did investors and uneasy home buyers. A sluggish economy and uncertainty caused December sales fizzle overall.

THE ROAD IS NO LONGER PAVED WITH GOLD, BUT PRICES ARE APPRECIATING

Overall, Texas real estate is still appreciating. Prices are going up, even in notoriously flat markets like Houston and San Antonio. I also saw a report that lake areas, like Austin's South Lake Travis, are seeing a boom. Here's a quick few reasons why.

1. Buyers and investors who can qualify for loans are getting them and buying. Mortgage Bankers like Mission Mortgage are dominating the market now that larger banks have stepped back to protect their Walstreet investors. Mike McCoy at Mission Mortgage has flexible mortgage and construction loan products like asset-based lending for "safer" zero down loans.

2. New home builders have pulled back. The big guys stopped overbuilding. This may sound scary to some, but it's not. A glut of inventory is bad. Texas inventory has increased due to slower sales, but Texas new housing starts were only at about 5-6 months out when the market shifted versus 12-13 months in Arizona and California. Current inventory is being absorbed as new mortgage products come online.

Next week, we'll discuss individual cities with local experts. HINT: Austin, McAllen and San Antonio are in the top 25 of most housing predictions for best U.S. real estate markets in 2008. Housing Predictor even had Austin at #1 and Houston at #3.

DON'T WANT TO WAIT ON US? OTHER MARKET STAT AND FORECAST RESOURCES

2008 Housing Forecast from the San Antonio Board of Realtors.

Housing Predictor's Top 25 Real Estate Markets in 2008. Top 25 Worst U.S. Markets. Also check out their Lucky 7 Investor Forecast on where to stack your real estate gold.

Keep track each month with the Texas Real Estate Update newsletter.

See Houston's November Sales as well as Dallas' November and December Stats.

Texas market condition reporters are coming.