Forgive the long time between replies (went to Vegas the day after I started the thread and promptly forgot about it) I posted the original post because I am looking through homebuilders glasses for the future.
In reply to zk excellent post, who I always meant to come back and give it the time it deserved.
While I do absolutely agree that psychology drives markets, the other part of the psychological makeup is the fundamental desire to own a home in America (which is different, than say the fundamental desire to own some stock) which counterbalances the market when homes get expensive people wont buy “extra” homes or may not stretch to buy, but people will still buy.
The desire for people not to “lose” money in buying a home is matched by the desire for the owners not to “lose” money when selling . The instant a realtor, or zillow.com, or themself, or whatever tells an owner they can get X for a home… any dollar less than X is a dollar lost in their minds.
I think the psychological factor gives a reason for a long protracted muddled descent, with prices slowly edging down while inflation is lifting incomes and eventually, many years or so down the line an equilibrium has been achieved.
