Do you believe in statistics? Do you believe that increased supply lowers prices and increased demand raises them?
Back in 2007, I was still a relatively new Realtor and didn't really pay too much attention to the market stats. After the crash, I went back and analyzed what happened in our market and was amazed to see that the writing was on the wall that prices would start to fall as early as the middle of 2007. Despite this, prices continued to rise through most of 2008 in Glenwood Springs!
For me, this was lesson learned, and I vowed to watch market statistics like a hawk from then on.
It does indeed all come back to supply and demand. Over the last couple of years, the supply in our local market ( typically quoted in months) came down from highs of around 48 months or more in some markets at the depth of the recession, to lows of around 23 months in many towns last year. As a point of reference, a balanced market is considered to have around 6 months supply.