Derby Hill, Pardee Homes’ very expensive neighborhood in Carmel Valley, has had several homes come back on the market, probably as a result of contingent buyers not being able to sell their homes. A few weeks ago, they had 4 homes available; now there are 9 available.

Also,if you go to Carriage run, (smaller homes in the same area) they are very reluctant to tell you how many houses they have available. In the past, at most new home tracts, they have a map on a table in the sales office that tells you which lots are available. At Carriage run, they don’t have one of those. And, if you ask what they have available, they ask you what floor plan you’re interested in (my wife and I went in at different times and both got this response). If you say, “all of them,” they give you a blank stare for a second, stammer about “I don’t know exactly” for a few seconds, then go to the back room to consult with the lady in charge, and come back with a sheet of paper that has highlighted one home of each model from each phase (two phases so far, so that’s six houses). Are those really the only six available? Possible, doubtful.

I think it’s pretty clear that they’re worried about market psychology at this point (and well they should be). At Carriage Run’s first phase release, some friends of ours were thinking about buying a house for their mother. They were pretty far down the list, and when they saw nobody in front of them buying, they got a bit scared and decided not to buy.

I think the market psychology is changing faster than I’d have anticipated despite the best efforts of the RE industry. I mentioned a friend in an earlier post who called me a “dumbass” for not buying a home right now, as they’d be going up 10% a year for a while ’til things got better, and then, in a few years when things got better, they’d be going up faster than that. That was only a few weeks ago. Yesterday, he called me a “genius” for waiting. Sounds ridiculous, I know, for somebody to change their mind that much that fast. But that is, I think, typical of your average person. I think that homebuyer sentiment is a huge wave that just crested and is crashing right now before our eyes.

It’s been my argument all along that market psychology is the most important factor in the future of the housing market. And if peoples’ opinions continue to change at the current rate, it’s my opinion that prices will drop pretty fast.