Real Estate Bubble Deflating

Actors Dennis Hopper, left, and Eric Roberts speak to each other during the Starz panel for "Crash" at the Television Critics Association summer press tour in Pasadena, Calif. on Wednesday, July 29, 2009.
AP Photo/Matt Sayles
Lots of people made lots of money in the real estate boom.

But now the news is good if you're looking to buy, but for the first time in a long time, not so good if you are selling, reports CBS News correspondent Sharyn Alfonsi

In last year's, red-hot real estate market, homes like Letty Mallery's were selling for a million bucks – often in a day. But Letty's home has been on the market for five months and hasn't moved.

In fact, she has had to drop the price of her home twice – from $1 million to $950,000 to $895,000.

Letty says she is watching her nest egg shrink a little bit, "and we may still need to come down more," she says.

Loudon County, Va., where Letty lives, has been the nation's fastest growing county for the last five years. But like a lot of booming areas across the country, homes sales here have stalled.

"We waited too long. We missed the crest of the bubble," she says.

There are signs of a deflating bubble everywhere – literally. On one block, there are dozens of "For Sale" signs. For realtors, it's getting ugly.

"We try to do as many things as we can to sell," says one realtor, but "there's a lot of competition for sure."

Here the same number of people are buying homes, but now there are twice as many people selling. Business Week's Peter Coy says it's a classic sign of a turning market.

"We've had a lot of 'buy, buy, buy' mentality. Now we're starting to see a little bit of 'sell, sell, sell' creeping in around the edges," he says.

Especially on the coasts where prices shot up during the boom. Home sales in the middle part of the county – where boom wasn't so big – are steady. But in the last three months, sales in Boston, Los Angeles, Washington, D.C., Tampa, Miami and San Diego have stalled.

"Markets are driven not just by supply and demand but by expectations, by psychology and fear and greed," says Coy. "I think it's time to worry. I don't think it's time to panic."

Letty is trying to stay calm. She's packing up and hopes it's not too late to protect her most valuable investment – her home.

  • Stephen Smith

    Stephen Smith is a senior editor for CBSNews.com