The greater fool theory is what caused the bubble but the same ignorant sheeple will cause it collapse. A portion won’t be allowed to line up because of their credit score and income. Another group won’t be able to line up because they lack a down payment. Future landlords won’t line up because it doesn’t pencil out. Speculators/flippers won’t line up because they don’t expect appreciation. High paying jobs are not being created and all demographic studies on migration indicate a flight of high earners and an influx of low wage/low skilled people. Some that could buy before, now can’t and some that would buy before won’t and there’s no new demographic on the horizon to save the day. Yes, your friend has a cash positive rental and he won’t be ruined if his property falls to 400k, when the tide goes out he will have a bathing suit on but not everyone will and they will drag him down just like they dragged him up. Baby boomers inheriting money cannot be counted on as a large enough group to keep things status quo. The ignorant sheeple have changed their mindset and they won’t change back for a few years (the wise investor beats them to it), the watercooler talk has switched from how much money your co-worker made in r/e to who’s in foreclosure, there’s no stopping the invisible hand of economics.
Another poster has said before that as soon as Time magazine puts a picture of a foreclosure on the cover and declares that real estate is dead, that’s when he will buy, more and more I am subscribing to that theory.