Get real about the real estate market

Is it just me, or is ridiculous for people to talk about not selling because of the downturn in the real estate market? I'm talking about people who have owned property in California for years. This is just sillyness.

You don't hold on to your house, when you would otherwise want to sell it, because it's worth 2.8 times what you bought it for instead of 3 times what you bought it for.

I could understand holding off if you bought it for more than you could get for it, or if you bought it predominantly as an investment property and it's not worth your while to convert your investment, but if you bought it to live in and you've lived in it and it's more than doubled in value, in what sense is it a bad decision to sell it now?

The market could theoretically make your property quadruple in value too. Does that mean that you don't sell it at the peak of the market because it's only worth three times what you paid for it?

In 1992 we bought a beautiful row house 7 blocks from the U.S. Capitol for $222,000. In 1997, we sold it at a loss for $212,000 (which for us was the right decision because we needed to get our equity out and had enjoyed living there for 5 years prior to selling). Today, if the woman who bought the house from us for $212,000 in 1997 decided to sell she might only fetch $500,000 for it in the "slow" real estate market of Washington, DC, instead of the $600,000 she could have gotten last year; should she hold off?

Closely related, some of those who do put their houses on the market complain that the property doesn't sell. Why doesn't it sell? Because they they're asking too much for it. If they lowered the price, the homes would sell.

It never ceases to amaze me that people don't understand the fundamental principle of the real estate market: a property is only worth what people will pay for it, nothing more, nothing less. There is no independent concept of "what the property is worth."