I agree with some of what you say.  The East Coast is somewhat pricier, but it hasn't always been that way.  Houses in Swampscott, which could be purchased for around 85K in 1983 zoomed upwards to 150K by 1986 (the first bubble).  Condos in Haverhill that sold for 125K in the mid 80's bottomed out at around 7-10K by 1990.  There is no bubble right now - but I do remember well the hype followed by the hysteria, which led to a bubble. 

I wouldn't be quite so concerned about this if salaries kept pace with inflated house prices.  When my husband & I bought, we could just about swing the mortgage payment on one salary, so, while it would be fairly ugly if one of us lost our job it wouldn't be a train wreck.  Paying 330K for a cottage like ours would probably mean that first time buyers would be up a creek without two working adults with secure jobs & then there's also the whole greater fool thing as in who's going to pay more than 330K for a cottage.   That's the kind of scenario that haunts me because I believe there's a whole generation of first time buyers who may or may not still be priced right out of the market.  Without those first timers not too much moves.  Statistics isn't my strong suit so I can't quote facts & figures, but in my own practice I see more foreclosure work than sales, which is a bad thing.  This time of year I should be jumping with home sales, but not last year & not this year either.  I'm busy, but it's with the wrong kind of work.