Are you expecting 9% unemployment in California? From the third quarter of 1990 to the third quarter of 1996, average prices of existing homes in California fell 13 percent because the unemployment rate in California jumped from 5.1 percent in January 1990 to 8.3 percent in 1991 and to 9.9 percent in 1992.
California's unemployment rate was above the national average and did not dip below 9 percent until March 1994. The unemployment rate there today is what, 5.1%? Florida's unemployment rate is under 4%. Mortgage rates are low by historical standards and are declining. If unemployment, debt and mortgage rates aren't going to kill the market, what is?
Bubbles burst for a lot of reasons, some of them having nothing to do with the quantifiable fundamentals. One day a bunch of people wake up and decide that the $600,000 two bedroom condo may be worth $550,000 in six months or banks decide not to over extend themselves. Bubbles have to do with individual and institutional perception of value.