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Where I live, supply is low, demand high.

Yeah. I’m not talking about today. Rather, the next few months. It was a bubble waiting to pop anyway, It only takes a small catalyst to do it. A rate hike here, a subsidy disappearing there, higher income to payment ratio, etc. It doesn’t take much to pop the balloon when it’s really full.

Another element not accounted here is a pending credit crunch. It's going to be very hard to get a loan. The net effect will be serious deflation of real estate prices.

I just lost a system administrator from my San Diego office to another employer in VA. The employee could not cobble up enough to qualify to buy even a small condo in San Diego with both spouses working. He could afford a place in VA and had a good enough offer to jump ship. I spent two years training the guy in Linux and VMware to augment his Windows credentials. Once again, I have two offices in two cities with no sysadmins. People in that pay grade can't afford San Diego and don't want to work in Omaha. After camping in a rented bedroom in San Diego for 5 years to help that project, I'm back home in Idaho. No real desire to repeat the experience.