The point is that housing has far surpassed GDP, inflation, and as you can see from the following graphs, there is currently an oversupply. You will also notice that overvaluation is more acute in some areas than others, but it is also clear that it is a nationwide problem. Here's are the charts demonstrating over supply. Notice the oversupply begins with the steadily falling interest rates that began after 1980:
http://www.housingbubblebust.com/PopHsgRates/Overbuilt.html
You are assuming that demand for housing per capita is some kind of constant. It is not. It is affected by price and by consumer choice, including inter alia, the increasing demand for second homes. In any event, the supply and demand clears. It is not as if there are tons of empty homes out there.