"It isn't a debt bubble like the mortgage crisis and hasn't infected the public markets like the 90's. Caveate Emptor and all that." I've heard that a lot, but

"It isn't a debt bubble like the mortgage crisis and hasn't infected the public markets like the 90's. Caveate Emptor and all that." I've heard that a lot, but I wonder if it's as harmless as people say? If/when this bubble pops, won't that have a pretty tough spiral effect? Granted it might not be as deep as the late-90's bubble, but I'd have to think that this will be pretty grim when it happens too. Along with sky-high valuations come sky-high salaries, which breed high rent & purchase prices for homes. Along with that comes high tax revenue and such. If suddenly a young engineer's expected income drops from $150-$200k/year to $60k, that could be pretty rough. Granted it probably will affect the coasts a lot harder than the central US, but I'd think it'd have national effects regardless. Salaries drop, suddenly people can't afford their houses, so they either have to sell at a loss or try to hold on to it. What if a sizable chunk of the population is no longer able to afford college loans? You also mentioned the pension problem; if tax revenue starts to dry up because housing prices goes down, that could exacerbate a problem that's already popping up around the US.