It’s not a changing market, it’s a changed market. Expect the market to be like this locally until about 2009, maybe 2010. Don’t expect great appreciation, or in my opinion, much decline in values, either. It’s just different. The prices, financing, multiple bids on many properties, gone. Get used to it, and the faster you accept it, the better you may make a rational business decision when it involves your property purchase or sale.
As for the over priced listings which have been on the market for 4-5 months or more, with no bids? Get in, or get out is my advice. Either reduce your price, or get out of the market. Get real with what is happening today, and forget about what used to be. Many properties ARE selling now, but they are the ones who made a commitment to sell.
Does your house look like an Easter egg inside? Paint it, top to bottom, in neutral colors, and while you’re at it, get rid of the tired old carpet which has stains and worn spots. Don’t have the cash? Get one of the big carpet guys in who can throw some nice, medium grade beige carpet down, and freshen up your place.