For some households at least, losses in stock portfolios have been mitigated by significant increases in the value of residential real estate. These rises in house prices have led some to worry about the possibility of a "bubble" in housing prices and the associated risks of further losses in household wealth, should this putative bubble pop.
Let me digress for a moment to address this issue. Although bubbles in any asset are notoriously hard to spot in advance (if they were obvious to the naked eye, they would not arise in the first place), in my judgment there is today little evidence of serious or systematic overvaluation in the U.S. residential housing market.