I think it is very, very difficult to make make broad-based national assumptions, as the real estate market is so very different, depending on the local area.
While I don't live in a huge city, I don't live in a tiny village either. Around here, we are experiencing quite the phenomenon. As of right now, there are a huge quantity of properties on the market - and people just keep on building. Subdivision after subdivision are being put up - while there are literally thousands of homes still on the market. While I don't expect the "real estate bubble" to burst around here, I do expect to see a dip in prices until we return to a more normal inventory of homes on the market.
However, it seems that the trend around here is to buy as much house as you can afford, so there are many properties on the low end just sitting vacent. Because, at the low end, you can buy a house for approximately the same amount you can rent for around here, the rental market is doing rather badly right now. The vacency factor is phenomonal - and the huge apartment complexes have been offering crazy deals (No security deposit, 2 months free, and they pay for moving costs) to try and fill up.
It'll be interesting to see where the market goes around here.
As for my personal opinion on the national market, I don't think we have much to worry about. Granted, real estate prices have gone up rapidly recently, it was to be expected in the type of market that we had. Once interest rates increase, the rental market will come back.
I do have one major, concern, though. A HUGE percentage of people in the areas where real estate appreciated incredibly fast have interest only adjustable rate mortgages. Once those rates adjust, and the interest only payment portion is over, I think that there will likely be a slew of foreclosures, as the mindset of many people was that they'd purchase a property and sell it for a ton more in the next couple of years. With a market as saturated as it is, I think it's very possible that they won't get what the expected to from the property, and without the ability to continue paying the higher payments, will eventually be foreclosed on.
Wow, enough rambling - I gotta get back to work
