Another GEM from Noah Rosenblatt…

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The Buyer – Seller Disconnect

Posted by Noah Rosenblatt on December 3, 2008 at 8.21 AM

So, why is the market illiquid? Two main reasons:

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a) sellers are anchored to peak pricing; yet to realize the significant decline in buyer confidence OR that their property is likely worth 15-20% below peak levels

b) buyer confidence has not only declined, but has been shattered; as prices fall and fundamentals deteriorate, more buyers have rushed to the sidelines rather than jump into the market to take advantage of deals. The sideline money theory (the argument, mostly by brokers, that there will be a floor on prices because buyers will flock to pick up deals from the sidelines on even the most minuscule of price adjustments) was proven wrong once again

…the disconnect is making the market illiquid. Lets discuss each.

See the entire post here...don’t forget to read the comments…many are very interesting! md

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