Just about every Wall Street analyst and economist now predicts that 2006 will be a slower year on the real estate front, not much of an insight given that interest rates are increasing and wobbly loans with little down and negative amortization are being restricted.

There is now an argument being made which suggests that if home prices in the U.S. stall, suburban values will fall most of all. The reason for this view? The experience seen in Japan during recent years.

Japan's economy took a header some 15 years ago when the Nikkei reached 38,915 on December 29, 1989 -- and then dove into a financial abyss. The same index closed 2005 at 16,111.43.

Not only did Japanese share values fall, property values also collapsed, in some cases by half -- and more.

Whether this example applies to the U.S. is debatable. While there are some parallels, the New York Times reports that the Japanese experience differs from what we are now seeing in part because "property prices rose much faster and more steeply" in Japan. (See: "Take It From Japan: Bubbles Hurt," December 25, 2005)

However, says the Times, "after years of tumbling land prices have made Tokyo more affordable again, few people are shopping for homes in the distant suburbs. That has led to severe declines in property values in these outlying areas, leaving many people with homes that are worth less than the balance on their mortgages from a decade or more ago."

So, if we see a real estate slowdown in the U.S. will the outer suburbs get clobbered?

I don't think this will be the typical case in the event U.S. home prices ease. Instead look for prices to change up or down as they do now with some uniformity within metro areas. Here's why:

First, we have already had a stock market crash that cost investors trillions of dollars. In 2000 the Dow Jones Industrial Average reached 11722.98 on January 14, 2000 while the NASDAQ composite index hit 5048.62 on March 10, 2000.

These indexes have never recovered and at the end of 2005 stood at 10717.50 and 2205.32 respectively.

Meanwhile, real estate values -- driven in large measure by low-interest levels and insufficient new construction -- have soared. The National Association of Realtors reports that in November 2005 a typical existing home sold for $215,000, up substantially from $139,000 in 2000.

So, unlike Japan, a stock-market crash has not produced a concurrent real estate decline. One reason certainly relates to population.

In 1990 Japan had 123.6 million people. Fifteen years later the population had reached an estimated 127.6 million, an increase of just 3.2 percent. Adding 4 million people to the Japanese population produced little need for the construction of additional housing units.

In the U.S. during the same period, the population grew from 248.8 million to 298 million. That's an additional 19.8 percent -- another 49.2 million people who need to be housed somewhere.

Because of population growth the US must expand metro areas or build higher. Given our enormous land bank, the sensible economic choice is to build out rather than up.

Within individual metro areas pricing in the U.S. has been largely harmonious -- prices both in-town and out have typically been moving up or down in lock-step, a pattern which seems likely to continue. Unlike Japan, we need additional housing units and the only reasonable place to put those units is further and further from core metro areas. While prices in far suburbs may not be as high as downtown cores, percentage gains and losses need not be significantly different -- an important measure for homeowners and investors alike.

Here's an example: Average prices in Washington, D.C. in November were 27.0 percent higher than a year earlier, according to Metropolitan Regional Information Systems. To the distant south, in Charles County, MD, prices were up 22.91 percent in the same period. To the north and far west of the Nation's capital, in rural Washington County, MD, average values increased 24.61 percent.

So take a look at your extended metro area. Are folks moving in or out? The answer will surely impact local housing values.