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Friday, June 2, 2006 | Bubble? No! Retrenchment? Probable! Inventories continue to increase, but there is a difference between those sellers who must sell, and those who wish to sell.
Buyers are sitting on the sidelines because they too are divided between “must buy” and “wish to buy.” Buyers are waiting to see if the much predicted bubble will burst so they can buy cheaper – of course in most cases they must also sell cheaper but it is the uncertainty that is killing current the market. Some of the “must sell” will eventually reduce their prices a few percent, perhaps as much as 10 percent, but within a year the market will stabilize at a slightly lower level and the market will resume as strong, but slightly lower, and with a higher inventory and a high demand but not a willingness to pay premiums.
It is all part of a normal market cycle, and those of us in the business for three decades have seen cycles before. So far there is little panic in the real estate market, and it is!
Panic like that drives a “bubble” and so far at least the only panic seems to be among newspaper reporters trying to instigate the “end of the world.”