Market Valuations

"The key is that the stock market's ability to defy valuations is ultimately temporary. Over the long-term, investors can get perfectly good results by focusing only on valuations and ignoring the quality of market action altogether. Over the short-term, however, this can be very frustrating because the market can defy valuations for months or in some cases years before ultimately wiping out those "speculative" gains by returning to more normal valuations" from Dr. John Hussman's current report from the Hussman Funds.

How does this apply to the Bay Area Housing Market?