I'm not so sure I believe everything is peachy with the federal deficit.  You may find this article from USA Today from last August interesting. http://www.usatoday.com/news/washington/2006-08-02-deficit-usat_x.htm
I don't want to sound like a doom and gloomer, but I expect a real slowdown in the residential market over the next couple of years.  A lot of foreign money that supports our country's ridiculously high debt is now being transferred into non dollar denominated debt, the euro in particular.  I'm afraid this will lead to higher interest rates in the not to distant future.  It will be the best way for the government to continue to attract foriegn money.
I think we will continue to see a settling of appriciation of real estate values for several years.  We had a big run on appriciation for the last six or seven years, and I would guess it will take as many years to wash it out.  All the creative financing that has been so popular over the last few years should come to a head as the recent borrowers find it impossible to refinance based on ever growing valualtions.  We have been through these times before, this will be my third time personally that the real estate industry takes a big dive.  I'm doing the same thing that so many of the large corporations are doing, stashing cash to cover the downturn.  Real estate has always been cyclical, some folks will be gone in a few years and some will emerge stronger.  As always, it should be an interesting ride.