New Blog 2: House Sale Prices

Thursday, 8 November 2012

House Sale Prices

It's not a great time to be selling a house — and to add insult to injury, behavioral economists put the "blame" on sellers. In many cities, it seems that no buyer wants to pay what any seller can bear to accept. This is said to be a classic case of loss aversion. Sellers remember what their house would have sold for, before the bubble burst. Compared to that would-have, should-have price, today's prices feel like losses. When confronted with a probable "loss," people are inclined to take chances, in order to avoid it. This is why racetrack bettors try to erase their losses with a long-shot bet. And it's why today's home sellers set prices too high for the market, in the faint hope that somehow, someday, a buyer will pay their unrealistic price. This leads to frustration on both sides — or make that, on all three sides. Agents are getting slammed, too, as sales slow to a trickle.