I'll echo the sentiments of others that location is still king and that the market is vastly different if you are willing to put in some work compared to something that is move-in ready.
I know in the areas that I keep an eye on (Bloomfield Hills, Birmingham, Beverly Hills, Franklin, the southern part of Bloomfield Township) there is very little left that is in move-in condition and under $300k. However, if you are willing to put in a little elbow grease (or contract out the work), you can still find some deals in those neighborhoods.
I'm nosy so when a house in my area hits the market I check out the price and what it last sold at the last couple times and the new selling price (if it sells). Not only are the houses selling for more than the did a couple of years ago, but quite a few of them seem to be selling for more than asking. Average days on the market seem to be plummeting as well, especially in the more desirable neighborhoods.
I don't really think this is a bubble compared to what was seen about a decade ago. First, we are still pretty far below the peak prices in around 2004 - 2007, and more importantly, there could actually be a shortage of housing on the market in the area (especially for move-in ready housing).
Here's where the nerdy demographer in me takes over - Since the start of the downturn new household formation has not kept pace with the changes in population (even with population declines in a few of the years). Average household size has increased, but the reason for the increase is older children have moved back in with their parents (or just waited longer to move out) or other instances of doubling up, not because people in the area are having more children. As the jobs are starting to return and the population seems to be growing a bit more steadily again (still slowly though), the demand for housing is going to continue to rise. And because this area never had a glut of empty housing like you can still find in Southern Florida or California's Inland Empire existing home prices will rise a bit faster than it would in those other places. Also, the increase in sales and sale prices isn't being fueled by sub-prime lending and overbuilding like it was in the past - it's quite a bit more difficult to get a mortgage today than it was about 7 years ago.
In the end, locally (and by local I mean Metro Detroit because I don't really have any idea what's happening west of US-23), as long as the jobs continue to steadily return and the population continues to rise, housing prices should continue to go up as well. Personally, I feel that the anemic population growth rate in the region (and the state really) is a bigger drag on the housing market here than anything else is.
Last edited by WSU JK; March 13th, 2013 at 02:08 PM.