The problem is that people will have seen a home go up in their neighborhood which is about the same size of their home and that home goes up for $400K...so they think (most homeowners think the same way), my home is better than that home so I will sell it for $425K. Nothing happens, so the guy grudgingly lowers his price down to $400K...nothing happens, it sits for a few months, people start thinking that the home has problems, and the owner lowers his price down to $375K and it finally sells.
The issue is now that the guy is not happy that he made $100K on his home (he bought it for $275K a couple of years ago)...he is pissed that he 'lost' $50,000. He never really had it, it was an inflated value in his head on what he thought the home was worth. Your home is only worth what people will pay for it but that is hard to understand when you are just coming out of a hot market and you think your home is a national treasure.
Another problem is all of those people that just built homes or are building homes and they bought at the peak 6 months ago...so they are paying top dollar for a home that will be worth less when it is finally finished in the fall. They financed it thru the builders and they use these builder's agents. Talk about a recipe for disaster.
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