It is the same thing with real estate. In the past couple of year the first-time home buyer has been driving the market, which coupled with sales of bank-owned and short-sale properties drove down the average home sale price – but not necessarily the average home value. But unfortunately it escalates because of the perception that people have, with the help of the media, and the fact that lenders consider recent home sales the same thing as a home’s value and are using distressed properties as comps when doing appraisals.

There’s no doubt that home prices had some ridiculous price increases during the early to mid 2000′s, and the market had to have a turn-down (just like it has done several times before), but the gloom & doom naysayers help drive down the perception of the real estate market starting in 2006-2007. Rather than look at real apple to apple (or 1950′s Cape to 1950′s Cape) numbers, they looked at the total market, which included foreclosures and eventually short sales.

Now the real estate market is not just that simple, but includes many other factors such as mortgage interest rates, types of loans being made, local economy, and too many others to name here.

I’m not an economist, just my observations over the last decade.