Mind you this isn't the only reason but it has a huge impact slowing down buyers.  It just annoys me to no end that there is scant logic out there.

For Example (real listings):

Apartment X went into contract for 840K in August.  The apartment was renovated like a new development unit.  Now in January, Apartment Y in the same building, just 2 floors up from Apt. X and in the same line came on the market.  Basically they are the same apartment excpet Apt.X has better finishes and Y is 2 floors higher.  So what does Apt. Y get priced at....an astonishing 995K.  That is over 150K more than Apt X that closed in August.  What logic is behind adding 18%+ appreciation in 5 months time - especially in a slowing of a boom market.  None.

Now that listing is going to linger longer on the market, drop it's price and contribute to an image of an unhealthy market.  It all could have been avoided with common sense.

Recently the NAR came out with a report saying basically that the sales volume has dropped yet pricing has risen.  These two variable operate in a direct proportion, not an inverse relationship.  Once again it points to improper pricing by brokers or sellers still trying to re-capture the boom of the market and not adjusting to the shift.  Everyone is hurt; customers can't find product, the market seems to have new product yet it's at incorrect levels so it can stagnate, and sellers waste valuable time and money.  I have had two recent customers who have suffered this fate.  When we finally found something it was incredibly over-priced, and ignoring the in house comparable of the same unit on a different floor.  We made a very generous cash offer that was rebuffed.  They then proceeded to drop the price by 125K after approx 2 months and still rebuffed out offer.  So after 4+ months that property still sits with no sale in the near future.

If people would just adjust their strategy of pricing units - the market would be and look super healthy because it still is in great shape.

With 2004 we saw 20%+ appreciation from the beginning to the end of the year.  Which is just incredible.  In 2005 for the first 3 quarters we still saw a continuation of 2004 escalating prices with generous levels of appreciation.

Moving to the end of the 2005 Quarter 3 and into Quarter 4 we saw a market adjustment due to a multitude of factors including the rising rates of mortgages, fuel costs, hurricanes..etc.  The demand while still very good stopped being crazy.

What gave this a more amplified perception was the fact of lagging acceptance of sellers and brokers to adjust their pricing strategies to this move in the current market. (they were still stuck in the glee of the previous 20 months cycle.)  Thus more properties stayed on the market longer (average time increased to aprox 125 days - still very normal), bigger price cuts of 100K are frequent, slower open houses..etc (and a lot of crying by brokers that the market is bad because they couldn't adjust to the marketplace.)  This then feeds to the news media who jump on this news because the Quarterly Stats are affected and they run article after article of how the market is falling.  Thus influencing comsumer framing perceptions causing more disconnect.

If things were priced right according to the marketplace and demand there wouldn't be so much fuel for the bursting bubble philosophy.

Traditionally when the market comes off a highpoint sellers and brokers usually lag behind the times hoping that they can still price properties the same way in the height of the boom.

This is the impetus, the tipping point that sets the stage for weaker market reports is improper pricing in terms of the markets direction and actions.

2006 will still show aprox. 6% appreciation - a sign of a strong market.

Manhattan Market Hits Wall - CNN article.