These do make sensational headlines.

This Silicon Valley 'teardown' just sold for $2.6 million.

"Another day, another postcard from the increasingly bizarre alternative universe that is Silicon Valley.  

This time, it's the eye-popping story of a 908-square-foot, lovely-seeming home in Palo Alto, California, that hit the market in February for an asking price of $1,927,000. 

Not only did the Stanford Avenue home, built in 1937 and described by Curbed San Francisco as a "teardown," sell, the site reports it brought in $623,000 over the asking price — that's a final sale price of $2,550,000."

If there was a nice looking house on this lot - no one on earth would have written this story. But because it's a tiny 908 sqft tear down shack - all of a sudden internet hysteria ensues. Despite the lot being big enough for a 3-4 bedroom home.

What I really don't understand is how people who write about real estate and business don't understand that the land is 90% of the cost. Maybe they don't have a house or carry insurance. That's where you find out how much it costs to replace your house if it were to burn down or whatever, and it's a tiny fraction of of what you owe the bank because most of the cost is in the land.

So what if this has a tiny tear down shack? Are they making more land in Palo Alto? No. Or anywhere else.

The article goes on to say:

"The house on Stanford Avenue is only the most recent, and hardly the most egregious, example of the burgeoning bubble on the Bay."

These people are going to be waiting a very long time for their echo bubble to pop. That is a once in a generation type event. You are not going to get people to leave their houses in the droves they did during the recession. It was basically a run on the banks. But with houses. Do you know how hard it is to make a run on a bank?

Additionally we have under building for a very long time. The longest on record. It's not enough to keep up with population growth. Some people estimate we are a million houses short. But I guess people always want to be on "record" saying this was a bubble.

Can prices go down? Sure - that is called a market. Prices go up. Prices go down. But a bubble popping scenario this isn't.