Is it just because of changes in lender’s underwriting criteria?  Obviously we have a seasonal slow down as the holidays approach.  And yes, buyers will be buying homes in spring because interest rates remain low.  The question remains how many buyers and how many sellers – the balance of inventory – supply and demand. 

It has become more difficult for buyers to finance their mortgage; larger down payments are required.  Lenders have become more prudent.  But there are a variety of lending programs for buyers in just about every situation including 0 to minimal down payments. 

But subprime crisis or not, real estate values do not go up forever, nor do values go down forever.  Over time home prices increase, then decrease, then increase again.  In 1989, George and I purchased a home in Glendale for $650,000; we sold the same home in 1995 for $450,000; a year ago that home was worth about a million dollars; today the home is probably worth low 900’s.  The value won’t go down to $450,000 or $650,000 again.  Home prices go up, they go down, but they always go up again.

In retrospect, interest rates should have been gradually increased over the last several years and we probably would have missed that last major home appreciation spike. This would have “put the brakes on” our over heated market.  And of course lenders made stupid loans. But we are at "where we are at today".  Inventory is high, however much of what is currently on the market is over priced, so it appears that there is a lot on the market; Well priced homes continue to sell - and yes, they continue to sell even during this holiday season.