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Could it be that all  the talk about real estate bubbles in the blogosphere and mainstream media could be a major cause of the slow down in the real estate market? The New York Times has an article today discussing this  phenomena and does a very good job with it.

I have always felt that the  real estate is a market full of self fulfilling prophecies. Who will buy a home at top dollar if expectations are that prices will fall. Only the corporate relocation folks that have no choice will be buying into a market such as this. Everyone else will sit on the sidelines and wait till the market settles down. Likewise, those who want to sell at the top of the market will race to get their homes on the market ASAP  to try to get it sold before  the market goes down even further.

Thus we have todays situation, high inventories with  low movements. But what is nice, when the malaise ends and confidence that the market is stable, there will be a very active  market as pent up demand is fulfilled.

Many buyers, having heard that the real estate market is a bubble in danger of popping, are refusing to offer the asking price on a house, convinced that it will soon drop. But many sellers are not blinking either, thinking that offers will improve when the weather does and biding their time until then.
As a result, the housing market is now in a deeply confusing state, with average prices still rising even though homes are taking much longer to sell and the number on the market has soared. Sometime soon — probably in the spring, the peak sales season — one side or the other will have to capitulate, many economists and industry executives predict.
“In my opinion, the jury on housing is still out,” said Antonio B. Mon, the chief executive of Technical Olympic USA, a home builder. “The period from now until May will tell the tale.”
Many real estate agents argue that the current slowdown is merely a pause, pointing out that interest rates remain low and that Americans still seem convinced that houses are a great investment. Buyers, on the other hand, are hoping that the rising number of unsold homes is a signal that a slump is coming. It was an early sign of the last housing slump, in the early 1990’s. via the New York Times.

Related posts:

1. Housing Bubble Deflation Will Not Cause Recession
2. Housing Bubble Bursting in Major Cities Since 2003
3. Housing Slowdown Affects Whole Economy
4. A Sign of Sanity: San Jose Housing Market Slowing Down
5. Vermont Maintaining Housing Growth in Slow New England