While some local housing markets are sinking fast, many will post production gains of up to 10% or more this year over last, according to a Harvard economist who says the sector is going through a long-expected correction."The bubble is not bursting," said Kent Colton, senior scholar at Harvard's Joint Center for Housing Studies, at the Midwinter Conference in Park City, Utah. "There will be no body bag nationally." Mr. Colton, a former executive vice president of the National Association of Home Builders, said the markets that will do well in 2007 will be those that never became overheated. The biggest gainers will be Nevada, Colorado, New Mexico, Illinois, Pennsylvania, and Tennessee, he said. And Georgia, North Carolina, New York, New Jersey, Utah, and Washington will be close behind. Markets that reached unsustainable heights over the last few years -- California, Florida, and Washington, to name a few -- are likely to feel the most pain, he said. Mr. Colton said the overall housing market is going through a much-needed correction. Between 2002 and 2005, he said, the sector was propelled by unprecedented annual gains in eight important benchmarks -- the ownership rate, new- and existing-home sales, new- and existing-home prices, single- and multi-family starts, and residential fixed investment. "This is something I suspect we will never see again," the Harvard scholar said. "We couldn't keep running at this level. A correction was necessary."

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