What happens to the Arizona real estate market if the feds pull the punch bowl away just when the party’s getting started?

Here’s Dr. Shiller’s gloomy take on the U.S. home market.

Shiller: The main factor is the world economic crisis and the efforts of governments around the world to stimulate the economy. Parts of those efforts have been directed at the housing market. In the U.S., there is an 8,000 dollar first-time home buyer’s tax credit which expires at the end of November. That’s a reason for concern, as it comes to an end. Also, the Federal Reserve has a plan to buy $1.25 trillion worth of mortgage-backed securities to support the housing market. They are most of the way through the program and anticipate phasing it out at some time in 2010 – that’s another thing that will go away.

My cynical guess is that over the next few months politicians will shift their attention from saving the world to saving their jobs… and the punch bowl won’t be pulled away.