One of the more robust ways to detect a bubble is by constructing a price index that summarizes market activity without getting distorted by short term changes.

One of the more robust ways to detect a bubble is by constructing a price index that summarizes market activity without getting distorted by short term changes. Perhaps the most respected housing price index is Case-Schiller house price index which currently indicates the market is somewhere between 150% to 200% above historic valuations. Since housing is something all need and is generally supported by incomes there is no reason to think that the current relatively high prices are robust and will endure. This article also points out that there is an imbalance between demand and supply which means that any large scale increase in supply is likely to moderate demand and market prices.