That's a fair question worth exploring further.
Housing activity is a function of several factors: Rates, the overall economy, supply, population growth, rental prices. These are the primary drivers of sales and pricing. Like all asset classes, other elements will impact end demand: sentiment, speculation, liquidity (easy financing terms, I/O loans, no doc mortages), etc.
Over the past 5 years, rates dropped, supply expanded, population expanded, prices rose. That's fairly normal. Then something a bit unusual happened: rates plummeted even further, prices rose more quickly as former stock market investors discovered Real Estate Speculation.
This group is notorious for being late to the party. Just as they bought right into the top in 2000, I suspect many did the same in the Summer of 2005.
Fast forward a year or so: Equity price shave dropped -- and not just the 2% you may have heard in the official data.
Most of the time, Real Estate is a function of the overall economy: Job creation, GDP, Rates. As we discussed extensively, this go round has seen the roles reversed: it's the prime mover of the economy.
Which leads us to this chart:
Historical chart of Residential Investment Cycles, 60 Years
Does this look like the downturn in Residential Investment is over? Except for 1995, most private RE investment contractions are much longer lived...