The housing market is very much a regional phenomenon. Consumers are hearing how the economy is slowing down and the housing market is a drain on the economy.

While residential construction has declined nationally, remember that housing markets differ all across the United States.

For example, we have all heard of the drastic price increases on the East and West coasts. In addition, we have heard about investor demand, second-home demand, and even increases that are the result of retirees relocating. These are just some of the factors that affect local housing markets and what makes them different.

Of course, there are some national factors that will influence every market. The overall economy expanding versus contracting, interest rates, the subprime crisis and tightening lending standards, to name a few, will affect every regional housing market.

How has the greater Augusta area's housing market performed over the past couple of years? The greater Augusta area includes six counties: Aiken, Burke, Columbia, Edgefield, McDuffie, and Richmond.

Overall, the greater Augusta housing market is doing well when all things are considered.

Augusta did not have the housing boom that many other regional markets saw in 2004 and 2005.

While home prices appreciated, Augusta did not see the rapid appreciation that sparked investor demand or speculative behavior.

This lack of a housing boom will serve the market well as the national economy is slowing down.

According to the Office of Federal Housing Enterprise Oversight, home prices in the area grew in the third quarter of 2007 by 5.3 percent from a year ago. So home prices are still appreciating.

How does this compare to national home price appreciation? Headlines have focused on home prices falling for the first time since 1994. Actually, home prices nationally fell relative to last quarter, but appreciated by 1.8 percent on a year-to-year basis.

Home price appreciation in Augusta outpacing the U.S. as a whole is a recent phenomenon. Price appreciation (from a year ago) in the U.S. has outpaced Augusta from the first quarter of 2002 to the third quarter of 2006. This should give some indication of the housing cycle.

Regional markets that experienced the boom in prices cannot sustain that type of activity indefinitely. The housing market will adjust. Unfortunately, the adjustment is most likely a rapid slowdown in price appreciation or even worse, price declines.

While the U.S. housing market is adjusting, so is the market in the greater Augusta area. For example, the third quarter 2006 rate of home price appreciation was in double digits, 10.5 percent. That was the first time Augusta had a double-digit annual home price increase since 1986.

While the Augusta area should expect to see home prices appreciate at a slower rate, the consistent and stable housing market will help the regional economy weather the slowdown in the national economy.

Mark A. Thompson is the Cree-Walker professor of business administration at Augusta State University. He can be reached at mthompson@aug.edu.