People buy homes for many reasons but nearly all view the purchase as an investment. As such confidence in value usually plays the biggest roll of all. I've heard it said often, "the buyer sets value". For if there is no buyer willing to pay what the seller wants, there is no transaction and the property sits on the market.
Consider this; if a buyer waits for prices in general to drop 10% and in the mean time the mortgage interest rate rises 1% the payment will be the same. If the seller waits for a higher price it si likely the interest rate will be higher and a prospective buyer might be squeezed out of the market. The house continues to sit.
Trying to time a purchase or sale to "beat the market conditions" often backfires in the peaks and valleys of the homes sales marketplace. This is especially true the longer we are in a down market. When home sales are humming along and prices are rising everyone is optimistic, even euphoric as we saw just a few years ago. But that is when risk is at its highest.
While some folks -sellers in particular- may still be in panic mode due to depressed value, most have hit the point of depressed. The good news is hope and optimism have begun to spring up just in time for the point of maximum opportuity.
In the Tucson Arizona homes market, pricing has leveled off and we now see relative price stability. The median home price for October 2009 was at $200,000. (For more see http://www.markfinchem.com.z57preview.com/custom5.shtml )
The draw to Tucson is primarily climate. Sun and relatively warm winter temperatures mean outdoor activities. Business Week ranked Tucson the #1 place to retire (http://images.businessweek.com/ss/09/07/0702_affordable_places_to_retire/index.h0tm). * Credit to Steve Harney, Case Shiller & West Court Funds