(1) On the alleged parallels to the dotcom collapse: the dotcom collapse was quite different, since the assets in question during the dotcom bubble were shares in companies with nebulous business plans, not ownership of hard, usable assets like homes.
(2) Rising inventories: inventories are rising but so is the population.
While I agree that many people misread the demand curve and believe that a 600K house bought today will be an 850K house next year, this does not mean that the 600K will slump to 300K. Housing demand may grow more slowly, but the amount of people who already want houses will not diminish significantly.
(3) There is a difference between people who speculate on real estate with little or no money down and people who save money by building up equity in high-quality real estate.
While there is a large and vocal minority of real estate speculators, the majority of Americans own their investment real estate for residential or rental purposes and not to flip in the market.
(4) You say that there is overbuilding in FL, CA, etc. - but the fact is, the structure of the job market is changing.
10 years ago a McMansion 75 minutes from Phoenix would be considered ridiculous. Now it may be a valuable home for a wealthy commuter.
I will also add re: the FL, TX, AZ, NC, SC, GA markets that more and more seniors have the money to buy retirement homes and condos in these states. There are employment, immigration and internal migration factors that are creating structural changes in the housing market.
Bottom line: judicious investment in home equity is a sounder savings strategy than a passbook account and will continue to be so. There will be dislocations in the housing market in certain areas, naturally. But the dotcom analogy is quite stretched.
"this does not mean that the 600K will slump to 300K. Housing demand may grow more slowly, but the amount of people who already want houses will not diminish significantly."
I guess the mechanism of a bust here, if it were to happen, would be that rising interest rates force forclosures which in turn flood the market w/ housing. I don't know anything about these new interest only loans, but couldn't decreased housing value also force essentially a "margin call" at some point too?