A lot of people have lost a lot of money betting on rising interest rates in the past couple years. Similarly some people have missed making a lot of money by avoiding real estate over the same time period.
Although it's often atrributed to J.P. Morgan, it seems it was actually Bernard Baruch who said "I made all my money by selling too soon."
I think this will be what many people who have recently sold residential real estate will be saying. Residential real estate markets are very local in nature with very different price trends and very different reasons behind demographic and price changes. But overall I believe too many people are chasing housing much as they chased internet stocks in 2000.
My bet is that interest rates, both short and long term, will continue to rise for the next year or two and that housing prices will be flat to lower to much lower in different parts of the country. Of course, this is "my position speaking" to a degree: I used to own property in Chicago and sold it a year ago at what I thought was a good price, and I consider myself very happy to be renting right now. (And I'm short 10-year note futures.)
Housing is a bit different from stocks because everyone needs a place to live and our tax code subsidizes housing purchases. But just like every other market the price is determined at the margin, i.e. by how many people want to buy or sell at that time. It does not take a large imbalance of more sellers than buyers or vice-versa to have a substantial short- or medium-term impact on almost any market. Housing is no exception though the price effects take somewhat longer to be seen due to the lack of liquidity in the market and the relatively poor information flow within the market.
People are much less likely to believe a decrease in housing prices whereas they can clearly see the decrease in a stock price. Also, people are rarely in the kind of rush to sell a house that they might be to sell a stock Therefore, it takes a longer time and relatively more information for a seller to come down in price to meet the current market.
All in all, I think the housing market is in for a very rough stretch which could possibly put a damper on the stock market as well. This does not mean I'm bearish on the economy...I'm not. But if I owned real estate now I would pay close attention to Bernard Baruch.
[Here's an interesting article on the same subject including some more specific data: