They will always have a greater fool theory element: "I'm a fool to buy this but there's a greater fool to take it off my hands" in the underlying psychology. Although demand based activity can resemble bubbles in the price movement, if the speculative aspect is missing it isn't a bubble.
Period.
From the CFA Institute:
Much attention has been paid to the fact that the rebound in single-family housing has been tepid, but investors must understand the underlying structural changes that are driving these changes.
As shown below, the rebound in housing starts has been uneven between single-family and multifamily housing. Single family has rebounded from a trough of ~400k annual starts to ~650k, but well below the peak of 1,800k in 2006. It’s a very different story in multifamily housing where housing starts are now at levels equal to or greater than pre-crisis at ~440k.
Single-Family Housing Starts (In Thousands)
Sources: Bloomberg.
Multifamily Housing Starts (In Thousands)
Sources: Bloomberg.
The strong rebound in multifamily housing is understandable from a number of perspectives. As shown below, the homeownership rate in the United States dropped to 64.7% as of 30 June 2014, which is the lowest it has been since 1995. As an aside, the rise of the homeownership rate starting in 1995 was no coincidence. In fact, President Clinton unveiled “The National Homeownership Strategy” on 2 May 1995, which directed HUD Secretary Henry Cisneros to boost homeownership in America to an all-time high by the end of the century....MORE
