I also sat out the housing bubble and its insane prices, but now we have a house we love and very small mortgage. Of course capital invested during a bubble is wasted, but that doesn't mean all investment in that asset class is a bad idea.
As long as you know how to factor in the costs if it turns out you were nowhere near the peak of the bubble, and you factor in the "lost" capital from paying rent rather than paying down on a mortgage. It can turn out to be extremely costly to wait out a bubble even if the alternative is buying a property that is guaranteed to drop in value at some point.
