Bubbles in RE and other markets always go thru the same steps:

1. Prices slowly rising.
2. People keep selling and moving up using more leverage.
3. Many people notice the rising prices. Some go to house-flipping course or see it on TV.
4. Flipping becomes a get rich quick scheme which works....for a while.
5. Mortgage companies and banks lower standards, e.g., fog-a-mirror test, because they also believe that prices will rise forever.
6. Prices go so high that mortgage companies get scared and raise standards.
7. Only a few can qualify to buy at the insane prices and even the wealthy investors get skittish.

Soooo

8. Everybody tries to sell at once. Not enough buyers so they drop the price.
9. Prices dropping. Most home buyers think "wait" for even lower prices.
10. Recession/bankruptcies/foreclosures commence.
11. When prices drop to sane levels, investors and home buyers return to the market.

Rinse and repeat.