I think the psychological effect has been in play now for a few months. Some of it is due perhaps to national media coverage, some of it from a frugality standpoint.

Case in point, I have 3 prospective buyers who have deferred their buying decision because: 1) they want to time the market bottom, or; 2) want more time to see how the economy shakes out, or; 3) want to make a good decision but realize they might take a loss if they have to bail out in less than 3 years.

I don’t think savvy buyers are going to be too affected by the news, because it’s been heading that way for awhile. If they are planning to put down roots, they’ll probably go ahead and commit (as other clients of mine have, nowhere near full list price though). The rest will probably look for a few months’ consistent performance (the ‘bottom’) before pulling the trigger.

On the flip side, perhaps the psychological effect will cause ‘casual’ home sellers to sit on the sidelines and keep the inventory at a reasonable level.

http://seattlebubble.com/blog/wp-content/uploads/2008/03/case-shillerhpi_westcoast200801-tn.png

It’s the case/schiller index with a date shift of 1 year for the PNW cities.

Do you think there will be any psychological impact on buyers now that Portland has headed into negative territory or do you think it’s a wash given how much media coverage there has already been with the falling market ?

A lot of it depends on how much of our inventory is “must sell” inventory due to mortgage resets or carrying costs on investment properties. I really haven’t seen enough data on that to make a guess at this time.

Any guesses from anecdotal evidence on how the March sales will pan out ?