I believe it's true because regular participants in buying/selling are all taking cues from 'what goes on around them'. If 95% of them are looking around, and

I believe it's true because regular participants in buying/selling are all taking cues from 'what goes on around them'. If 95% of them are looking around, and 5% are just buying 'at whatever price' - those people will drive pricing. When 'the house down the street' sells for 10% above asking, it validates all the homes sales in that environment, and gives confidence to the regular buyers that their investment is sound. If there is ever a hint of a plateau, all it takes is for a few price-inelastic buyers to come along and 'validate' prices. Then some buy on that basis, and the pricing cue percolates through the system. Once those people leave the market - there's no strong validation going on - and a small whiff of lack of price movement can put a chill on things, then prices can start to fall. Once they start to fall - it's a negative signal, wallets clam up. Without a rich buyer to restore confidence ... the spiral continues. It'd be an interesting model :)