Reply #6: This is the crux of it, right here.

[Carolab]

"Why will this fall come? The biggest reason is that income levels have greatly lagged the sharp jump in housing prices so; many buyers can’t afford the prices they’re paying. To buy, what many of them have done is taken the profit from selling their homes, used creative financing and traded up to even more expensive residences."

People have just gotten greedy. The RE market has been appreciating at warp speed, way past any historically realistic pace, for the past few years. People have invested way above their ability to pay, looking for a FAST return on investment. The mortgage industry has aided and abetted them for far too long. It's time to return to normal levels of appreciation.

I sold a home two years ago in a popular suburb. It cost them $600 to build it. They have it on the market for $850 now. That's just nuts.