I'm really new to house plants, and I never really paid much attention to these while they were at my grandparents' and later my parents' home. I did notice that the "soil" is really spongy and light, not very similar to outside garden soil. I'll have to ask my mom what she's planted them in. I was just very surprised to see these cute little mushrooms appear! And I am very interested in watching them grow, so maybe I'll wait awhile to change out the mix in the pot.

I wouldn't be too concerned about root rot. Botrytis, Pythium and Phytophthora (the most common root pathogens you'll encounter) don't produce large fruiting bodies. Sounds like there's something in your potting mix that is deteriorating. It may be the sphagnum but I'd be more inclined to think there's a bit of organic debris (eg sticks, leaves) in the sphagnum that is breaking down. Lower grades of sphagnum often contain sticks etc. The fact that the mushroom is growing where the plant gets watered probably has more to do with moisture than anything. FWIW removing the mushroom will do little to fix the problem (not that there is necessarily a problem). There's still mycelium throughout the mix. You can either live with the occassional mushroom or replace the mix (maybe not a bad idea after two years). In this instance, fungicides are unnecessary and may do more harm than good.

Debra, I don't know the name of the mushrooms you described but I do see them in mulch or sometimes on the top or edges of the compost pile a couple of days after a rainy spell. They seem to go away as quickly as they appeared. Usually, if you have aphids around, the lady bugs eventually appear and find them. Of course, I say that from the perspective of a person with acreage who doesn't spray chemicals. Any neighbors who might spray chemicals are acres and acres away, so nobody is spraying anything to hurt the lady bugs. In a less rural setting, if neighbors on your street are using chemicals, the lady bugs could be getting zapped before they can make their way to your place. If that is happening, there's not a lot you can do about it. Peppers appear pretty much the same way tomatoes do, right where the blossom is. I get the best fruit set on hot peppers when the temps are below maybe 90 or 93 or 95 degrees. When the highs are consistently higher than that, sometimes the blossoms drop without setting fruit. If you're patient, though, you'll eventually have fruit set on your peppers. All it takes is a slightly cooler day here or there and they'll bloom and set fruit. Some sweet pepper varieties are a little less likely to set fruit in hotter weather, but they too will set during a cool spell, and then will set like mad when the temps cool in the fall. My peppers went in late because of the extremely wet soil here from late April to late May, so even though the sweet peppers are heavily loaded (they were blooming in the paper cups before I set them out), the hot peppers have been slower. I noticed the hots all were heavily loaded with blooms mid-week of last week, and all except Caribbean Red have fruit set this week. So, I bet yours will be flowering and setting fruit any time now. If your peppers or tomatoes need a boost, 1 tablespoon of Epsom Salts diluted in a gallon of water gives the plants a quick dose of minerals that green them up and perk them up. Dawn

Mushrooms are just the visible signs of the fungi that live in any sort of soil, typically feeding off the decaying organic matter. Very common and completely harmless to the plant. They are not necessarily related to humidity. In fact, I'd go so far to say that your tree looks to be suffering from a lack of humidity/soil moisture :-)) What kind of potting soil are you using? Looks pretty finely textured and depleted and the tree would likely benefit from being repotted with fresh media and a good, thorough watering.