The largest factor is public perception – and mob psychology. It takes time for perceptions to change, especially when there is so much conflicting information.
Realtors are saying (many of them) – wow what a great time to buy! Some are falling for this. True price information is passed around this site, but the general media doesn’t really cover it.
The economy doesn’t suck yet, I believe that the interrelated stock market, bond market, hedge fund nonsense, all getting pressure from US debt and the housing market will start accelerating the pressure on consumers. There will be an ever increasing flight to risk avoidance, that means people selling and downsizing, and people, banks and others taking losses to get out. More pricing pressure, more pain. Right now things are holding together (look at the stock market), but an ever increasing shift will start hitting the market. Interest rates are not going down (more news on wall street) and there is a huge amount of mortgage assets which are not worth what they are written as – but as of now are only starting to be recognized (look at last week Bear-Sterns / ML issue).
As things get worse, employers will be afraid to hire, wages will tank, consumers will get leery, banks will tighten credit and we will have a massive move to the downside. Is this very bearish? Absolutely. Am I right? Who knows! I would bet that this will play out, and if it doesn’t, I also won’t be surprised. But I think I am ahead of the curve on this, especially because i am not prejudiced by having debt, owning a home, or have exposure to being fired / laid off.
