Some wisdom from a commenter at New Jersey Real Estate Report

Here’s the bullet version of my “next leg down” scenario:

1. This Fall, all the sellers who have pulled the “For Sale” sign out of the ground- hoping for a Spring rebound- won’t. Time’s up.

2. Why is time up? Take your pick: life circumstance, impending foreclosure, the realization things aren’t getting better anytime soon.

3. As REO/foreclosed homes increasingly work their way into the marketplace, those homes become the new comps. Unavoidable.

4. When you look at RE busts in past years, the first phase is marked by a standoff between buyers and sellers: prices decline only slightly, as sales volume dries up and inventory rises. When it becomes apparent to all involved that these trends are in place, the second phase occurs: a rush to the exits by sellers. This is when the bulk of the downward move in prices occurs. I believe we’ve reached that point. Buyer sentiment is entrenched, and the subprime meltdown (and incipient credit crunch) should be the catalyst that triggers seller panic.

Seems about right to me