It’s possible for things to get stupid expensive just due to fundamental market forces and not due to a systemic market failure. In fact, it’s overwhelmingly more likely for this to be the case.
I think it’s people saying that “if it can’t go on forever, it won’t.” I don’t necessarily think that the bubble will pop, but I do think that real estate is overpriced and that there’s not enough societal wealth/income to actually prop up demand much further past where prices are today.
If the median household income can no longer afford the median home price (a function of median income, median home price, and prevailing interest rates), we’re gonna start to see a reduction of people bidding at those prices to where supply and demand curves put a ceiling on those prices. Those are strong headwinds against continued growth.
I don’t think there’s gonna be a big pop. But I think it’s entirely possible for home prices to stagnate for decades while incomes catch up, so that homeowners don’t see much appreciation in their home values.