The reason I made this assumption was that it wasn't people not entering the market, but people who had already been in the market but left - pulled their properties without a sale. Why would someone - who clearly wants to sell a property, leave the market in such numbers? Fully 1/3 of inventory just picked up and walked away. If someone has a better explanation I'm all for it. As I've said all along I don't want a crash just for some stupid self serving sense of righteousness, it doesn't benefit me as I'm not one of these balanced portfolio people as I've seldom seen someone make a lot of money by being balanced (plus it's not as much fun!), I'm all in in RE, I just think that requires me to be even more brutally honest in my assessments. You are correct in that I am assuming that's why these people have left and perhaps there are other reasons - I just can't imagine what they might be in such numbers.
Simuls, I am not disputing that your conclusion may well be right. It is just that most of the post is factual based on stats and working with the numbers whereas this assumption if incorrect could potentially be significant in terms of predicting what the market may/may not do in Spring going forward.
I wonder if there are/were a number of people who priced high and rationalized as follows: I will ask "top dollar" and if I get it, fine, if not, I am happy to continue to own and will retry the market in Spring. After all, if someone looked at Sept 2008 and then in Summer the following summer 2009 they saw a recovering market and are assuming the same will happen this time around.
Let's face it, if one plots TO from 2000 to 2010 while there is the brief dip in late 2008 to mid 2009, one could virtually run a positively sloped line all the way up to present with very little deviation making the 2008-2009 dip look absolutely insignificant.
As to your comment about being all in in real estate. It has been a winning strategy until now. I know you are enlightened enough to appreciate as you have said that you expect and are counting on a correction. But as they always say with Mutual funds: "Past performance is not a guarantee of future performance".
I like you like R/E as an investment. I can see it as opposed to paper which tells me I own something which may/may not be there in the future. At least my properties will. I can sell them to get cash. I can get a revenue stream from them. However, while I appreciate that I am fortunate to be able to spread my risk, it may not be feasible for everyone to do so. That said, I guess we are talking about the classic tortouse and the haire story. I plod along and you like the haire with your single motivated strategy have been proven correct so far. I hope you continue to be on the right course and that we don't have a major alteration because like you, my single biggest asset class in R/E. However, as a low leverage investor, I am well positioned to ride out down turns but as you appreciate, I have not made the potential returns that I could have.
However,my investment principal is to acheive my goals with the least amount of risk possible even if that means sacrificing return. In other words, I rather talk about what I did not make than what I actually lost.
Now closing back on topic.
If you truly believe as you have posted that property may decline up to 25% over the next 5 years (I believe I am stating your position properly from past posts) should you not be selling now (at least some of your R/E portfolio), investing your profits for the next few years in another asset class/ investment, and buying back when your R/E when the opportunity presents itself?