Home sales have fallen, but I don't see much in the way of home prices falling. Yet at least. The house two down from me is a 3 bedroom, 2700 sq ft pink stucco beauty on the market for $1.8M. I'm keeping my eye on it to see what happens. Houses around here typically sell within a week of being on the market. This house has been up for two weeks, so even that's exceptional.

IMO, there is no real bubble. Not for real estate prices or mortgages at least. A bubble insinuates that people are leveraged beyond their means in an unsustainable way that would cause a crash and I'm just not seeing that here. The bubble in question is more for the realtors and speculators of the market. I do think that there will be a general correction of home prices, but that they will still be out of reach for most people - including myself. It is interesting, however, to see the psychology at work here. No one knows for sure, but some say that foreign buyers count for a very small percentage (5%?) of the overall market. This in turn though has increased neighboring property values and created bidding wars on nearly every new home. The perception is powerful. Either way, the kind of growth seen in the last few years was simply not sustainable. Something had to give.