While there are lots of cogs that make up the wheel that is the real estate market, at the end of the day, nothing really matters accept perceived value on the part of buyers. What we have to look at here is what it is exactly that can affect the perception of buyers. Lower values for homes is a gross oversimplification of what needs to change before we see a real turnaround in the market because fear that prices may go even lower can override the simple solution of lower price.
Fear itself of course is something that will need to change because right now, consumers have a lot of fear because they perceive a significant loss of control of their own pocketbooks because of the economic crisis.
Then of course, we have to get down to some real estate basics like the constriction of lending guidelines and the supply of homes that is too high. Nationally, and here in the Atlanta real estate market, supply is beginning to decline, but, it has a long way to go before demand begins to outstrip supply. I've just seen and read too many things recently that keep saying that lower prices will by itself fix the real estate market which it cannot do. This post highlights a small but important reality that I hope will begin to let us see that there is a far bigger picture than just home prices that need to change before we see a real bottom and then the beginni9ngs of a turnaround.