I'm going to answer these questions one at a time to the best of my ability and I'll try not to put you to sleep.
First, "are housing prices in Vernal inflated"? No, not really. If you look at conditions in the market place, there is a high demand for affordable housing currently going on in Vernal. This causes a supply shortage and prices to rise. High school economics, I know, but the reason behind the supply shortage is that this area of Utah has an incredible amount of natural resources that are in high demand right now. Natural gas, oil and oil shale being the big ones. There is also a Utah State University campus being built in Vernal. The companies bringing employees to the area have had to resort to housing them in hotels until more affordable rent space is constructed. All of these companies are going to continue to need housing, but new construction projects (especially town houses) are popping up all over. Unfortunately, affordable houses ride the coat tails of all housing price increases. Yes, eventually supply will equalize with demand (I think you are getting close to that happening even as I write) and pricing will eventually level out or even fall. Your guess is as good as mine as to when you might see any serious decrease though.
Second, rent pricing is going to follow the housing demand pretty closely, and maybe even overtake it because some of the influx of workers only require temorary housing. Utah is seeing a VERY low rental vacancy rate state wide (like 1.8 or 2%). Plus you have a bit of a credit crunch still effecting borrowers. Lenders have tightend up their parameters on who can borrow. So in a high demand place like Vernal... you can see where I'm going here. Sorry.
Third, Boom/bust cycle. Not likely that you are going to see a severe drop in prices given the current economic conditions nation wide. Oil shale is the new energy buzz word and we currently have 2 people running for president that are wanting to expand domestic oil production. Congress is also feeling the pressure from voters and no matter which political party you follow, pretty much everyone is wanting more domestic energy production. That means Utah is going to have demand put on us to answer some of these needs and since it is unlikely we are going to make wind farms on the salt flats, or put solar panels on every roof top, oil shale and natural gas are going to be in high demand for some time to come. Vernal has both. In spades.
I hope I didn't make you pass out with the long winded explination, but that question sparked my inner nerd and I guess I can't help myself.... This is the kind of stuff my wife has to put up with all the time. You can call her for some horror stories of my long winded diatribes if you would like. She has threatened me with duct tape more than once.
I hope you are able to connect with a good Realtor to help you decide on which housing choice is best for you. The benefits of having local insight as to what is happening in the market place and what is, or is not a good buy are priceless. Especially to a buyer. 99% of the time buyer agent commision is paid by the seller, so your agents help is pretty much free to you. Good luck!
Century21 Golden Spike Realty