A lot of people think the housing market has flattened out. If it was true that it has flattened out (I don’t think we’re close to the bottom for a few years at least), then it’d be a good time to buy since it can only go up. People hear that prices have dropped and that the market has flattened out and they think they can get a good deal.
They haven’t really heard about the number of foreclosures, they just heard a blurb about it on the news, but they haven’t looked at Realtytrac and seen the insane number of foreclosures mapped out.
They don’t have any idea that the tightening of credit means fewer sales and lower home prices.
They haven’t seen the Credit Suisse ARM reset schedule.
They haven’t read the Professor’s Bubble Primer.
They probably just talked to a Realtor who told them that prices have flattened out and that it’s a good time to buy (which happened to my wife yesterday in talking to a Realtor friend).
