Over at Calculated Risk, CR has published a post that is better than most of the paid research the public never sees. I strongly recommend reading this post carefully and bookmarking it. A detailed look at the graphs will show almost anyone how severe the overbuilding problem is. Take a very careful look at the graph showing inventory vs months of supply, and notice that periods in which the inventory (building plus completions) overshot months of supply for very long were succeeded by a spike in months of supply (also associated with bad economic times, btw).
Really, this post is an exceptional resource.
If you are puzzled by current blah-blah about credit markets, Tanta's series on how securitizations work can be found at this post (scroll to the bottom for links to the entire series). The background this gives you will truly enable you to understand the economic problems of the mortgage market.