I'll try to answer your questions as best I can, all IMHO, of course.
In real estate terms: Nationally, mortgage interest rates were outrageously high '81 to '84, excluding many buyers from the market. By '85, interest rates came down to about 11-13%, which was relatively attractive, and brought buyers who were unable to qualify for a mortgage the past 4 or 5 years back into the market (pent up demand). As interest rates continued to fall, more and more people were able to qualify for a home loan. Competition among buyers caused housing prices to rise, again raising monthly mortgage payments resulting in the exclusion of buyers who couldn't qualify for home loans, causing over supply of housing (peaking in '89) and subsequent bursting bubble. Cycle repeats: home prices fall, interest rates fall, buyers enter again, home prices go ballistic, buyers stop buying, repeat ad infinitum. Supply/demand basics.
larger picture: Tech was screaming ahead here in California, jobs were plentiful, demographics were shifting with increasing population influx, the economy was booming, money everywhere, low, low, low interest rates. Then in '89 our largest local employer, McDonnell Douglass Corp began layoffs. People worried about their jobs don't buy homes. The bust part of the cycle began.
Of course real estate is local in nature, but mortgage interest rates are relatively uniform across the nation and the national economy is a big factor in all housing. Note that the Texas housing boom crashed before ours did, and when the tech wreck occurred housing in Northern California was hardest hit. It's local, and it is cyclical, and it is national. Florida, NYC, wherever, no one is immune to these housing and economic cycles.
The housing market is not so different to the stockmarket. Cycles repeat. Timing is everything. Nothing is a guaranteed "win" all of the time! Which cup is the ball under today? Care to guess where it will be tomorrow?
Newly
P.S. I didn't "try/need to sell in 89", I BOUGHT in '89, silly me!
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