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Mary Umberger of the Chicago Tribune nails the housing market with the line, “it’s the psychology, stupid.” The economy is still moving ahead, the dollar is weak allowing international buyers bargains getting into the market, and interest rates are low.

But the buyers and sellers can not make a deal. Sellers are holding out for the dollars of yester-year and buyers are afraid they are buying too early. So agents and brokers sit waiting for the impasse to be cleared. Once commerce starts up again we will not have the salad days of the early 2000’s but we will have a marketplace functioning normally. Now all we have is a national game of chicken.

“Mismatched expectations,” explains Jay Ritter, a professor of finance at the University of Florida who says that consumer behavior is the wild card in the marketplace impasse. Many home sellers, he says, are in love with the old days, when home prices seemingly rose by the hour. And sellers, he said, are stuck in neutral, waiting for a better deal.
“When prices are going down and there are articles in the news about prices dropping, it leads more people to wait and see, and it becomes a self-fulfilling prophecy,” Ritter said. “Rather than closing the deal now, they’re on strike, waiting until after prices have fallen.”
This week, the impasse manifested itself in a 13 percent decline in the nation’s existing-home sales in August, as reported by the National Association of Realtors. Thursday’s report from the Commerce Department showed a 21.2 percent drop in sales of new single-family homes year-over-year, to an annualized rate of 795,000, the lowest since June 2000. via chicagotribune.com.

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