The conundrum is the cost of housing. Newspapers and television have reported that the cost of housing has risen dramatically, not only in Boston, but throughout the entire metropolitan area. Whether it's Beacon Hill or Quincy, real estate prices are soaring.

For those looking to sell, that's a good thing. But those looking to buy or rent are in trouble.

The increasing cost of housing has become a big political issue as well. Boston Mayor Tom Menino has made affordable housing his public policy centerpiece this year, arguing that rising housing costs threaten to drive middle class residents from the city.

A booming economy, rent control, the sudden popularity of city living -- these are all theories put forth to explain the surge in housing prices. None of them makes much sense, however.

Consider the booming economy. Absent inflation, strong economies themselves do not create high prices; just because people have more money in their pockets does not mean that they are now willing to pay more for the same item. Thus, millionaires still pay the same price for a head of cabbage as the poor.

Rent control's demise is similarly unpersuasive. Rent control was abolished a few years ago. But those controls only existed in three communities (Boston, Brookline, and Cambridge), making it an unpersuasive explanation of why costs are rising in communities such as Somerville, Arlington and Milton that never imposed controls on rents.

It is true that city living has become more popular. Thus, prices in Beacon Hill and Back Bay have soared over the last few years as downtown living as suddenly become popular. That kind of price increase is understandable; any Economics 101 class would predict correctly that increased demand in situations of fixed supply will push prices higher.

Of course, that scenario means that some communities, somewhere, are losing residents to the Back Bay and Beacon Hill. One would expect therefore that housing prices should be dropping in those communities.

But that's not happening. The increase in housing prices isn't confined to a few neighborhoods. It happening virtually everywhere in the metropolitan region. This confounds common sense -- every single neighborhood and town can't become simultaneously more popular.

The truth is that housing markets, like every other market, are ruled by the twin gods of supply and demand. An increase in demand will cause prices to climb. An increase in supply will cause prices to drop. So what's happening to demand and supply that causes prices to increase?

Housing demand relates to two things:  the number of people who want housing and the kind of housing they want. But while Massachusetts population has probably increased slightly over the last decade, it certainly hasn't been significant enough to warrant the price surges we see now. There simply aren't that many more people looking for housing now than were before.

One thing the booming economy may have created, however, is a change in the kind of housing people want. It is true, to go back to the example of the millionaire, that the rich pay the same amount for a head of cabbage as the poor. But the rich, by dint of their new wealth, may now be willing to pay more for a better class of cabbage -- organically grown, baby Napa cabbage, for example.

Maybe that's happening in Massachusetts. Families who have benefited from the state's strong economy for the last decade may want better housing:  more space, more yard, better quality, and so on. Indeed, it's this kind of phenomenon that explains the newfound popularity of both close-in urban neighborhoods and the mini-mansions that now characterize new construction in Boston's suburbs.

It's an interesting explanation. Still, it doesn't explain why homes that may be less desirable -- a fifth floor one-bedroom walkup, for example -- has also seen its value rise considerably.

And the supply side? Local politicians like to blame the recent spate of condo conversions (taking a rental apartment and selling it as a condominium), arguing they have decreased the supply of rental apartments. Perhaps. But the overall supply of housing hasn't changed. Any decline in rental units is matched by an increase in units available for sale -- and remember, it's all housing, not just rental housing, that's seeing an increase in price.

So far, the whole point of this article has been that there is no good explanation for the rise in housing prices. That's the conundrum. There is no good reason, except, perhaps, for this. Housing may be a market governed by supply and demand but it is not the same kind of market as, say, the market for cabbages. In the case of cabbages, at any one time all cabbages are for sale and all of those who want cabbages are out there, buying cabbages. Cabbages trade back and forth constantly.

That's not true of the housing market. At any one point, few -- very few -- homes are available for sale or for rent. Similarly, very few people are looking to move or rent. Moreover, there's a huge additional cost to buying and selling housing, namely, moving. Moving is expensive, disruptive and entails many, non-monetary costs such as leaving old friends and having to learn all about a new neighborhood. That's why very few people at any one time are looking to move.

Thus, while in the long run housing markets may behave like regular markets, in the short run, they do not. In the short run, prices are set at the margins, by the behavior of a relatively few number of people who may be moving or looking to move. The results can be odd -- prices can quickly seem to inflate, for example.

That, I think, is what is happening here. Hence my prediction (drum roll, please): Expect an adjustment -- a significant moderation of prices -- in, say, the next 12 to 24 months. Why? As noted before, in the long run, housing markets will ultimately behave like regular markets. A few small changes have resulted in a significant run up of prices. A few small changes -- particularly changes in supply -- will have the reverse effect. Entranced by high prices, more people will put their homes on the market, thereby seemingly increasing the supply of available housing. Similarly, new housing is now being built. As that housing comes on line, prices will moderate as well.

So my recommendations. If you own a home and want to capitalize on its seemingly high new value, sell now -- don't wait. If you're looking to buy, on the other hand, wait. Interestingly enough, of course, this is just the kind of advice that, if followed, will guarantee that housing prices drop.