The NY Times ran an article the other day on the home value bubble, the gist being that home prices really are way up: 

Housing boom and bust

Is it a bubble, or has something fundamental changed? Could be both. Housing has for years been less expensive in the US compared to Europe or Japan. Maybe globalization is leveling that out a bit. OTOH, Chinese investments in the US have kept the money supply here in fairly good shape. Eventually they will call in their markers, the dollar may drop and domesting lending may dry up further busting the home market bubble. Anything can happen, and it usually does.