Is There a U.S. Housing Bubble?

Many respectable people are worrying that the U.S. is in the throes of a speculative housing bubble. As an example, from NPR,

Yale University economics professor Robert Shiller ... calls the housing market a "bubble" -- meaning prices are out of touch with economic reality -- and predicts the market will collapse. The only question, he says, is when.

Also, see this for a detailed discussion of the size of the bubble in different local residential real estate markets. Here's its summary:

Growth-management planning leads to rapid, artificial increases in the price of housing that can turn home buyers into speculators. Such speculation leads to housing bubbles that, when they burst, can impose huge costs on individual homeowners and the economy as a whole.

Such bubbles certainly exist in San Jose, Boston and other California and Northeast housing markets as well as those in a few other regions. Most regions suffering bubbles have used various forms of growth-management planning, while most regions that don't use growth-management planning appear safe unless there are other constraints on the land supply. While bubbles in Portland, Denver, and other smart-growth regions are not as severe as in San Jose or Boston, planners should be far more wary than they are of the likelihood that their policies will create such bubbles.

What amazes me is that there still are such things as bubbles. In today's economy, with low-cost information, the existence of bubbles casts serious doubt on the more simplified theories of rational expectations. I can understand that many buyers might over-estimate values to some extent for awhile, but a "bubble", which I think of as being extreme [whatever that means!], really puzzles me.

Here are two and a half things that have not caused the bubble [if one exists]:

1. "Smart Growth" or regulations requiring green areas; these regulations might cause housing prices to be higher than they otherwise would be, but they do not cause them to be higher than one would expect, using supply and demand, nor did they recently cause them to rise rapidly unless they have only recently been implemented. In short, they may have contributed to higher housing prices in some markets, but they didn't cause a speculative bubble.
2. Mortgage interest deductability: it's been around a long time; there's no reason for it to start causing housing prices to rise now.
3. (This one has a bit of merit.) Low interest rates: "WHAT?" you ask in disbelief. Interest rates have been low for a LONG time, now. Yes, they have encouraged people to buy second houses as investments, but I don't think they have caused a bubble.
   
   A friend of mine is slowly selling off several properties he owns. I guess he expects housing prices to fall.