While the panelists mostly agreed with Zell's assessment of the situation, Sternlicht did say that one issue with the housing market gives him pause--the reliance on variable rates, particularly in California, where as many as 85% of first quarter deals hinged on variable rate mortgages. "We could see a problem if short term rates rose," Sternlicht said. He added that the reliance on variable rates was a "peculiarity to the California compared to other parts of the country."

Karatz said one thing that keeps demand so strong in California is the lack of available product. "For there to be a crash, you have to issue lots of building permits," Karatz said. "But in California, there's no building permits."

For Mizel, the issue is not one of demand for housing, but one of affordability. "If people can afford it, they want single-family, detached homes--that's the American dream," he said. But due to affordability constraints, more and more potential homeowners are turning to condos, which are fueling the condo conversion craze. While condos are hitting the market in record numbers, Zell said it wouldn't cause a problem with oversupply. "Converting apartments to condos doesn't changes the dynamics of supply," he said.

After the discussion ended, the panelists reconvened for another session that was co-moderated by Feldman and Michael Desiato, editor-in-chief of Real Estate Media. Closed to the public, the discussion delved deeper into the issues of investment opportunities, foreign dollars flooding into US properties and investment and development opportunities overseas.