I do not think a bubble is occurring. You cannot rely too heavily on Zillow and Trulia estimates of value. First of all, in this market, you need compa-rable sales data that is up to the minute current. Second of all, some sites, Zillow in particular, rely on price per square foot to do their calculations and we just don't use that here in New Jersey. Trulia and Zillow may be a good rule of thumb but for cutting edge accurate data you need to talk to a realtor. Also, home values have nothing to do with the age of the home. If the homes have been well maintained and updated their value has gone up and down just like everyone else's home values.
I would recommend you talk to a local realtor who is familiar with the market there in Somerset. The realtor will help you look at recent sales in the neighborhood in question to see what homes are actually selling for today. Then you will have a far more accurate idea of what the kind of home you are looking for will actually cost and you can go from there. You might also want to consider purchasing a short sale since those homes can usually be gotten at a discount. It takes longer and it can be a frustrating process, but if you are patient and follow the advice of your realtor you may be able to purcahse the home of your dreams at a very, very good price.