Comment by the_gastropod

Valuation of assets typically is a function of how productive the asset is. In the case of housing, it's best to assume you're renting out the property. If you can rent a property for ~12% of the cost annually, that's probably a pretty decently priced house (your returns after maintenance, taxes, etc. would be pretty close to something like the S&P500). If you can only rent for, say, 5% of the cost annually, some might say the house is overvalued.