37 comments on UK House Sellers In Denial About The Property Crisis - Energy Too?
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37 comments on UK House Sellers In Denial About The Property Crisis - Energy Too?
Comments can no longer be added to this story.
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The psychology behind people's reluctance to lower asking price is called prospect theory. The problem is that homeowners view selling at below what they expected as a loss to be avoided, and not as a failure to gain what was arguably an unsustainable high price overinflated by property developer manipulation.
Don't ask me where I've read it, but I'd been led to believe that this is standard behavior when a housing bubble in particular bursts: Actual declines may not be severe, but many owners choose simply to hold the house (on the market or off it) until inflation allows them to claim a nominal gain. This sustains the crisis by adding to supplies, and so the length of the housing correction tends to be proportional to the depth. Meanwhile, the home-building industry contracts to a tiny fraction (in the Great Depression 1/9) of its former size.