For most people, their increased home values have little meaning, unless you sell your home and either downsize or move somewhere with far cheaper homes.
I disagree. I think that a large percentage of people are succumbing to the "wealth effect." Some are not saving, thinking that the increased price of the home is "saving" for them. Others are running up credit card debt with the idea that an equity loan will get them out of trouble. And a good many are counting on the sale of that home to finance their retirement.
I'm only counting on the sale of one of my houses to do that. One has already nearly doubled in value in 4 years, and the other was worth 15% more than I paid for it 4 months ago. I can keep both till I retire, and with even modest gains the sale of one will pay off the other.
Real Estate will not crash like the stock market can. Neither people or mortgage companies will pay people to take their property.
As long as the population is growing (it is), and they're not building more freeways in large cities (most aren't, thus trapping workers in a fixed radius) then real estate will continue to go up. Even if they have to bulldose homes and put up high density housing in order to pay the higher prices.
Too bad for all of them .... suckers!