“Change in psychology” is the primary force in any market of any product.
The same people were probably stock experts in the late 90’s.
What else has changed ? Not much. The homes still look the same, they havent moved them. Loans are (mostly) still available. People are still breathing.
Prices dropping didn’t cause the change. The change in thinking is what is causing prices to drop, and then falling prices scare people further.
This is true in any market, esp a bubble. The party is over, the bubble has burst.
Why didn’t people buy a house 5 years ago that could have ?
The psychology was different.
Nobody KNEW in 1996 that prices would triple in 9 years, many people just got lucky.(Some think that they were just smart) Those who bought in 2005 might be unlucky.
Manias didn’t start with tulip bulbs in 17th century Holland.
It’s happened more recently with stocks, gold, silver, coins, stamps, beanie babies, baseball cards, etc.
Something that was “worth” $500 at one time, might be pennies today. Fear and greed rules markets.
When markets are HOT for anything, people cannot imagine there being no buyers, thinking that prices can only drop a few %. Nothing is further from the truth.
When the psychology shifts, watch out below.
Where are all the RE investors that attended seminars ? They wanted to buy homes 2 years ago. They are cheaper today, why aren’t they buying ?? Psychology changed.
The most sobering thing in the world is trying to daytrade stocks.
Some people can never accept that the higher price just seconds ago means nothing anymore, and it may never ever be that price again. Everybody should try this at least once…
Some people are still clinging to stocks that tanked 7-8 years ago, still waiting to get even.
It’s the same thinking that many people have today that their house WAS “worth” $1 million in 2005, so that IS what it’s worth, and it will be back there soon, even though it’s only $800,000 today…….
