Robert Shiller has a new edition of Irrational Exuberance coming out, this one will feature a chapter on real estate. Shiller, of course, predicted the stock market collapse and now believes that we are near the peak of housing prices. He is also involved in establishing a futures market that would allow people to hedge against movements in housing prices (see also my post on The New Financial Order). Here is a short interview with him on these subjects.
I too think that housing prices are inflated. It is certain that prices cannot continue to rise as they have in recent years and when interest rates increase, as they surely will as budget deficits continue to balloon and Asian central banks grow weary of taking losses on their portfolios, prices will fall both because of the rise in interest rates per se and because the increase will prick the bubble. Yes, Tyler has outed me as well as Brad De Long and Brad Setser.