The "boom" has already slowed. Houses remain on the market much longer than previously. As rates rise and folks are less secure about their economic futures, it will get worse.
"it will get worse"
I agree, with the late entrants being the hardest hit.
The psychology present is similar to that of the dot.com craze. I have friends in California who purchased a multifamily property months back, taking a $1,440.00 negative hit per month on a variable loan with the notion that the market will continue up as it has.
The spread between mortgage payments and rents is going to be huge as the interest rates kick up. Renters are bound by wages, the old saying about blood out of a stone is appropriate.
I have two friends one a mortgage broker and the other a realtor. Both told me things are really starting to change since most of the investors are tapped out and are getting hammered with carrying costs. They both told me they think the high property taxes and fuel costs are scaring people off as well as the feeling that the most of the appreciation in many areas has peaked.
So, when people don't see the potential for gain in a lot of these areas, people just are not going to jump at these insane prices anymore.