Can a bubble burst from the top?
There's a glut of high-priced houses, half of which were built in the last decade during the stock market boom. according to this Wall Street Journal story (subscription required):
Can a bubble burst from the top? While the rest of the housing market may be holding up in a tough economy, the country's most superpriced homes, the ones that start at eight figures, are in the midst of an unprecedented glut. According to one count, there are at least 44 $20 million houses for sale across the country -- four times as many as just five years ago. Go up to the market's stratosphere and you'll find the same thing: A full dozen homes have been listed in the $50 million range, easily a record. "Many people are testing the waters," says John Brian Losh, chairman of the Who's Who in Luxury Real Estate directory, which tracks this market. Their fear, he says: that they'll miss out.
...According to historians, the country hasn't seen so many monumental new homes since the days of the robber barons a century ago. Corporate scandals and Wall Street gyrations eventually burst that bubble. In the last few decades, the highest end of the market has at times been an indicator for the rest of real estate. In the post-Gulf War slump, for instance, high-price housing in some markets tumbled first -- and furthest -- with prices falling by half in places like Bel-Air, Calif. Now, high-end sellers have to face not only a shaky economy, but a sense that, post-Enron, a megamansion is just too opulent. "It's pretty hard to hide an enormous sprawling mansion," says architectural critic and author Thomas Fisher.