How much have housing prices gone up since you "saw" the bubble in hot markets in 2003? As I said, I expect a mild deflation myself - now - in hot markets. But I didn't see that in 2003. I saw that in 2005, as interest rates began their creep up combined with price levels. In fact I bought a house in the desert in California in 2003 (La Quinta), somewhat on an impulse. I liked the lot. I posted a pic of it in 2004 on this very site. It basically doubled in value since then. Did I expect that? No. Did I expect some appreciation? Yes. I thought housing prices in that market were somewhat undervalued, maybe by about 20%-25%. It turned out to be 50%, for some properties. And so it goes. Crude macro analyses just don't cut it. Really.
Your place will probably hold up to any bubble-burst a bit longer since this resort area will continue to be a magnet for well to do snowbirds and Canucks.
(Since we moved out here fulltime exactly four years ago, I'd guess our home has gone up - on paper - from the high 200's in 2002 to maybe 600 now.....but there are a ton of 'fersale' signs up this season!)
The flip side is obvious to me as well. Houses that were purchased last year on the coast may fall 50% overnight. There are only low wage jobs on the coast. The entire coast has signs warning of 'Dangerous Tsunami Waves.' There are rumors all time time about quakes off the coast. Many of those house have been built right on or very near the beach. One 6.5 and millions in real estate could be washed away.