In my first comment, I was trying to make the point that often when a true bubble is in effect, people start forecasting almost infinite future profits, so they drive up valuations to insane levels. Thus if we were at the height of a bubble I would expect the valuations of home-builders (a proxy for the real estate boom) to be in the 50's to 100's, not 15. In other words, as you posit in the original post, I don't think we're yet at the height of the boom, and definitely not in "bubble" territory. That said, I think that some local markets *are* in bubble mode as Chip's comment supports as do some of the anecdotes in the articles you cite. Here is another data point suggesting a bubble in local markets: the existence of services aimed at "flipping" properties. In my opinion, one of the tell-tale signs of a bubble is the almost exclusive focus on the exchange value of a good, i.e. valuing something only by what the next buyer will (hopefully) pay. The existence of a site like this: http://www.condoflip.com/ suggests we're getting into that territory.

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Posted by Amit Ghate to Thrutch at 6/20/2005 10:34:36 AM