Unfortunately the power of the media to make markets move en-masse on hype and panic is greater then the actual economic drivers that may exist. What the media predicts many times happens, not because they have some kind of capability of seeing what others are not capable of, but their influence is so great over the masses, that what they present as fact, actually becomes fact through a self fulfilling prophecy. Fear and tragedy sells newspapers and gets people to watch to the news. They know this and exploit it all the time. The only true un-biased news I have found is on PBS.

Frankly, I'm not surprised. In one day I read two articles in the same paper - one saying the market had stabilized and the other saying the market was due for the biggest drop in the history of real estate.

All the media buzz affects things. Prices in our area have not dropped by more than a few % points. But people are saying prices have "plummeted". But they haven't.

I'm not disagreeing, but Paper Money is hardly an unbiased news source either. All "The sky is falling" bloggers are affecting more attitudes than mass media. IMO, the Housing Bubble 2006 is a repackaged version of the Outsourcing 2004. Remember just 2 yrs ago all the websites and bloggers ranted about how India would ruin the US tech industry? Well, that didn't happen. In fact, hiring and incomes are up as many employers realzied that outsourcing caused as many problems as it solved. Mass media needs viewers, but so do bloggers.

The National Association of Home Builders did a study on medias influence on the market place (link below).

""When people are actually thinking about buying a home, they are driven by the details of how it will impact their family budget and lifestyle and contribute to their long-term wealth, and that gives them a much closer perspective on the market than what can be conveyed in news coverage," Riehle continued."

Here is a link that might be useful: News Stories Not The Driving Force Behind Home Buying

caroeib, selling a home in this market will give you a quick lesson in how the media affects buyerÂs attitudes. We closed last week on our last investment house in South Florida. Just about every buyer that looked at the house over the last 120 days expected us to cut 10% or more off our already competitive price. My wife is also a realtor and she will tell you first hand that many buyers are losing very good deals on houses in our market because they are reading the news paper and listening to all of these bubble and foreclosure stories. She had one buyer that was relocating miss three deals that were snapped up by investors. All this because they expected a steep discount since the news in S. Florida is all about the market going south and sellers going belly up because they can't afford to wait for a buyer to come along. So regardless of what the National homebuilders want to quote, the media, which includes the National Homebuilders article, does affect the way buyers view the market.

The best guide that I have ever read for timing markets is very simple. When you start hearing stories about how much money people with no investment experience are making, that's the time to sell. Likewise, once these same unsophisticated investors are flushed out of the market, that's the time to buy.

Lastly, contrary to what most would want you to believe markets usually don't turn around in months. It takes years. Real-estate is a great investment, but anyone that thinks they are going to get in today and make huge profits is probably going to be disappointed. My money for the next few years will be largely in the equity markets which are poised for some big gains as stocks heat up again.

Kitchenshock, the study concluded that 19% of people listened to the media in regards to housing, your wife very well could have had one of those 19%. But the conclusion is that the majority DONT and just do whatever they want when the time is right for them financially and from a life standpoint.

"Lastly, contrary to what most would want you to believe markets usually don't turn around in months. It takes years."

I ABSOLUTELY agree, anyone who thinks this is all going to turn right back around in the next couple of years is deluding themselves.