The folks at CalculatedRisk blog provide a useful graphic for understanding some of the dynamics of housing prices, bubbles, and the subsequent collapse. Below is the Case-Shiller house price index for three different house price "tiers."
Note that the lowest priced houses witnessed the fastest appreciation, and the fastest subsequent fall. One of the theories underlying this housing market is that the government "forced" banks to make bad loans to people with insufficient income to support the purchase. That should be reflected in demand for lower-priced housing. To the extent that the above reflects excess demand for housing in the lower tier, these data would tend to support that hypothesis. Of course, this is just San Francisco, but it does provide some interesting food for thought.