It was the most obvious and unnecessary collapse in years, and the most illogical.
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Absolutely, people confused cost with value! Most can understand that if a billionaire were to go to the most remote desert location he could find and build a huge mansion it could never be sold for anywhere near the cost of construction. Why is it that many of the same people cannot comprehend that simply running up the price because interest rates are very low and credit is as loose as a goose does not increase the actual value of the house? I have been to a lot of auctions and I have seen bidders pay eighty dollars for a fan which could be bought new for forty and which they had to remove from the ceiling to boot. Why did they do it? Auction fever, they forgot that they did not actually have to own it, they went nuts because someone else wanted it, it is an amazing thing to watch. Judging from comments I was reading on FR just a year or two back some people would have thought there was new wealth being created by those who bid up the price of the ceiling fan!