Turn out the lights. The party is over in Boston.

Greater Boston’s once-sizzling home sales have cooled so much this fall that realtors are reverting to a description not heard in a decade: “Buyer’s market.” From the South End to the South Shore to Cape Ann, the list of unsold properties is growing, and so are reductions in asking prices. Attractive houses in good locations with seemingly appropriate pricetags are getting scant interest. Real estate agents, who six months ago played host to streams of buyers, are now presiding over open houses that draw few if any lookers.

In Jamaica Plain, even a $70,000 price cut — to $399,000 — hasn’t generated much interest in a two-bedroom, bi-level condo in a 19th century mansion that has been on the market for about a month. Sunday, only four people, including two curious neighbors, came to an open house.

“My seller is willing” to consider a lower price, said the broker, Anne Connolly, “but there’s no buyers to deal with.” The fall slowdown not only represents a sea change for sellers, who for years have enjoyed multiple offers and higher prices, but also indicates the region’s bull housing market is at an end. Real estate agents say a long-predicted market correction appears underway as the gap between the price of housing and peoples’ incomes — now even wider than at peak of the 1980s housing boom — has become too great to sustain the recent pace of sales and appreciation.

No buyers? Fancy that. On a $70,000 price cut no less. Let’s see, is that a 15% price reduction? Yep. Does that include a 6% fee to the real estate agent/broker? Nope. Now bear in mind we do not know how much that house was purchased for or how much the price was jacked up to being listed originally at $469,000 but we do know that a year ago or so there was panic buying of such properties. No buyers left? All tapped out? Perhaps $399,000 is more than a tad expensive for a two bedroom condo.

Certainly, few expect an “80s-style collapse, when home values plunged 25 percent or more”. Today, the economy and lenders are far stronger, and mortgage rates, which topped 10 percent when the last boom went bust, are far lower — currently about 6 percent. In the 1980s, overbuilding, unsound lending practices, and intense speculation by investors, along with higher interest rates, sparked a real-estate crash.

Perhaps more people should expect an “80s-style collapse”. Why shouldn’t there be one. Today’s economy is “far stonger” only because of spiraling home prices supporting consumption. Take away real estate and what have you got? Nothing, that’s what, other than boated home prices to show for Greenspan’s folly at trying to prevent deflation. “In the 1980s, overbuilding, unsound lending practices, and intense speculation by investors, along with higher interest rates, sparked a real-estate crash.” Exactly what is different now, other than rampant speculation by the masses orders of magnitude higher. In fact unsound lending practices have probably never been more unsound.

While this may be good news for buyers, a slowing housing market will add a drag to Massachusetts’ already sluggish economy. Real estate has been one of the state’s few bright spots, generating not only jobs when most other sectors declined, but also wealth, in the form of rapidly appreciating home equity.

Actually it’s not good news for anyone, at least anyone leveraged in debt. By itself it will slow the economy far more than any of the talking head economists seem to think.

Last Sunday, Globe reporters visited about a dozen open houses in different Boston neighborhoods and suburban communities. In Rockport, only four potential buyers visited a three-bedroom Cape, on the market since July despite three price reductions to $369,000 from $384,000.

At an open house in Braintree last Sunday, Jeff Brown, a 30-year-old health care professional, said he and his wife, Julie, have a price in their head, and they plan to stick to it as they shop. Last spring, Brown added, they were outbid on five homes, all sold above asking price.

Recently, after viewing a home in Norwell, listed at $645,000, Brown was told as he walked out, “We’ll take $535,000.”

“We’ll take $535,000” huh? Why is it listed at $645,000 then? $645,000 seems a bit unreasonable to me if $535,000 is the proper value. Will anyone even offer $535,000? If so, $535,000 is a whopping 17% reduction right off the bat. Once again, that does not count agent fees. And once again we do not know what this seller paid or how high the ask price was initially jacked up. What we do see however, are signs of a few possibly panicked sellers. There will be more of them as this bubble popping progresses from locale to locale.

I want to add one other comment here. If agents are listing houses 17% too high, how quickly might a general distrust or suspicion of listing prices set in? One or two cases in Boston does not make a national reality, but one has to wonder about what might happen if “buyer suspicion” does set in. I hazard a guess those listing agents did the sellers no good at all if the real value of that house is closer to $535,000 than $645,000.

The party is clearly over in Boston. Those party lights seem to be flickering in other areas as well. I suggest that based on skyrocketing inventories everywhere I look. It is likely those flickering lights will soon be going out all over the place with a FED hell bent on containing inflation, inflation they created with reckless monetary policy. That is the sad bottom line of this mess, and there is going to be hell to pay for it too. At this point I think there are two possibilities as to how this housing bubble plays out: a complete sudden collapse in the bubble areas, or a slow prolonged torture like Japan went through. As I see it, those are the only options and neither is pretty.

Mike Shedlock / Mish/