In the short run this will cause panic, as people feel they are missing out.

In the medium run, this will force more people back to the sidlines. If they cant buy anything they like, why buy?

In the long run this will take a long time to heal.

In no way is this anything more than a realization of the reality that already exists. People like to buy houses, especially when the Government is stimulating the hell out of it and interest rates are just plain stupid. Even if you think they shouldnt.