This interesting question over at patrick.net on the F word (Fear).
The human behavior aspect of the late great housing bubble will be a fascinating study down the road - and two words come to mind - Fear and Greed.
Fear drove renters to get into a house or forever be priced out of the market (or so they thought). Greed drove people to buy more than one house, trade in a perfectly good house for a much more expensive one on the hopes of making a killing, and greed drove the entire REIC I'd say.
Now Fear has gone the other direction - people are now panicking, canceling their builder contracts, putting their home on the market as fast as they can, and fear is stopping new home buyers from even thinking of making an offer. Here's the post:
We've talked about the fear/greed cycle that drove the RE market for the last few years. The big fear, as discussed before, was usually about being priced out forever. People jumped into the market because they were afraid not to.
But now the fear is going in a different direction. People are afraid of losing their homes, their equity and their jobs. We're already seeing panic selling here in certain parts of Ca. And the news is offering up daily stories that stoke the fear of the FB's.
What affect do you think all this fear is going to have on the RE market in the near future? Are you afraid?
August 25, 2006
Posted by blogger at 8/25/2006