Some truth on here.
From personal experience: there are people around the world with a lot of money. $1 million is not what it used to be. Manhattan is one place where they want to buy real estate, and there are others, similarly getting priced ridiculously for the average person. Not so to those with real money. I know small apartments that rent for 100,000 euros a MONTH in Monaco.
There have emerged a lot of wealthy people internationally in the last 15 years. There have always been places where they have looked to park some money in the form of inflated-price assets. Manhattan is an international such place, along with parts of HK, London, Paris, Monaco, Dubai, etc., etc.
The "bubble" is something I have wondered about. I recently had the opportunity to acquire some of this real estate, at a "good" price, that I still considered over-priced. Why? Because I don't have all the money in the world, and because I was comparing the price to what I could get that would satisfy needs that I have other than wealth preservation.
In thinking about it, I was wondering what the value of the real estate would be in, say, 10-20 years. In seeing who was in that community, and in seeing the kind of generational wealth that exists, I concluded that, although the price was currently high, it would retain its value unless the country that it was in went completely to pot--which is unlikely, although anything is possible within 20 years. However, in older Mediterranean areas, places have "gone to pot" and can still maintain outrageous real estate prices in certain areas.
Manhattan, though, I don't know. It doesn't have the same kind of history as those places. All of these people own property in various places, of course. To be fair, the bulk of people buying in Mediterranean areas are nouveau-riche Chinese and Russians, and any others who have realized oil-based wealth in the past while. NYC is slightly more diverse, but not much. Look at other "desirable" north american areas--silicon valley, local tech people (lots of Chinese); Beverly Hills, generational US wealth; Vancouver/Toronto, Chinese.
Some "normal" people get caught up in things, and inhabit places they inherited, or flip places they inherited and buy another, paying either nothing, or just the increment--so they aren't sitting on a million-dollar mortgage, but a $100-$200k mortgage.
There are STILL lots of ARM's out there, especially in those Canadian hot-spots. Everybody is nervous about them re-setting sometime in 2015, for starters, so it is likely that you will see a wave of selling before a rise in interest rates is announced, by those who cannot actually afford their places.
The "bubble" is one of prices, not of value, and I don't think that it will burst in the REAL international places, like HK or Monaco or London or Manhattan, but I could see places like Toronto going significantly down, although even there it is all Chinese driving up the prices.