I think there are always two kinds of people on this debate every time: The first group believes people forgot the mistakes of the past and are committing them again, the second group believes everyone is too afraid with what happened 10 years ago so everyone is on risk aversion mode.
In my opinion, the housing market will naturally see a downturn but it will a soft/mild one. Nothing like the housing bubble of the mid 2000s, the conditions just aren't there. (On this point, we are indeed committing the same mistake in another industry: Subprime car loans. But that's a discussing for another forum and for another day)
The housing market is seeing inflated prices not due to a demand-side issue but rather due to a supply-side one. Three important factors come to mind:
1. Self-inflected injuries at the local level: Read this as zoning, rent control, etc. Places such as SF have laws in place that encourage people to hold onto their property for as long as possible while simultaneously discouraging developers from "densifying" an area. That will undoubtedly reduce supply and, with an increment in demand, raise prices.
2. Constructions jobs are not sexy: Among the younger generations you see an unwillingness to join the workforce as a construction worker. According to data, the median age of construction workers has gone up and currently there are about 200k openings nation-wide. All of this together means that the labor cost is becoming too expensive.
3. Construction materials are more expensive now than before, adjusting for inflation: This one is self-explanatory but with the added increasing labor costs overall, potential projects are basically outpriced and become unattainable.
These are basically the 3 main reasons major developers cite when explaining why there's not enough housing units being added nation-wide. As a result, many of them can barely break even when developing lower- and middle-class housing and instead opt for luxury housing development - where they can still get a healthy profit (think Hudson Yards).
On top of this one must highlight another factor: Babyboomers are not as willing to "move out" as preceding generations. Nation-wide you see that in general retirees are not willing to let go of their homes and prefer to live there. Nothing wrong with that, but it creates a market inefficiency: When their kids go away, retired couples refuse to move out into smaller units and instead let 2, 3 or even 4 rooms be empty. This generates upward pressure on the prices as there's unused capacity. When you check other past generations, you saw a much higher incidence for retires to move out into smaller units allowing young families to move in to the house.
As mentioned above, one should see a soft/mild downturn in the housing market as more and more people are priced out and demand goes down. The market should correct itself eventually but it will not be a violent correction a la 2008 Housing Crisis as many want/expect.
