Robert Shiller States My Case
In today's Wall Street Journal, economists Robert Shiller and Karl Case have an opinion piece that talks about the housing market. Buyer psychology is very important. It led to the big rise in housing prices and will determine the length and severity of the slowdown. I liked this paragraph from the article:
While our surveys indicate that relatively few expect prices to actually fall, buyers do not want to pay prices that are significantly higher than a year ago. Buyers are waiting and low-balling. Sellers want to get a price increase of the kind they've observed in the recent past. The result is that fewer agreements are reached, and sales fall. If the housing market were like the bond market and all houses for sale were auctioned every day, prices would indeed fall precipitously. But they are not. The aggregate indexes based on repeat sales have decelerated markedly but are not yet falling.