Real estate prices increased markedly in Germany, in particular in metropolitan areas. These increases lead to the conjecture/presumption that speculative bubbles are developing, similar to those in Spain or Ireland in 2007 and 2008. Based on a user cost of housing approach it is shown, that for most German districts the recent price changes can be ascribed to fundamental factors and are not driven by speculative behavior. The increasing prices can rather be interpreted as a catch-up process, especially because real estate prices did not rise the decade before. Modelling different price and interest rate scenarios support this explanation. Even a sudden and pronounced surge in interest rates would give scope for a sharp price correction, which is typical for a bursting bubble. Thus, the probability of an imminent real estate bubble is rather low. The low interest rate could rather change housing consumption in general and lead to fundamental structural changes in the German real estate market as homeownership becomes more attractive in comparison to renting.