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@h2o
Read the link I posted. The more people choose not to buy (or to bid low), the fewer quality offers come to market (the bad drives out the good) and the less people are willing to buy.
Taken to an extreme, you can end up with an extremely illiquid market in which very little actually shifts. That's kinda what's happened in the credit markets, hence the 'crunch' - it's actually an immense illiquidity problem because nobody wants to lend against assets the worth of which they do not know.