September 24, 2007 at 5:55 PM #10397farbetParticipant
ECONOMISTS and other humans don’t always see eye to eye. “Economists tend to think people are crazy because they won’t sell their houses for less than they paid for them — and people think economists are crazy for thinking things exactly like that,” said Professor Christopher Mayer, director of the Paul Milstein Center for Real Estate at Columbia Business School and an authority on real estate economics….September 24, 2007 at 7:38 PM #85765eccen in escParticipant
eccen in esc
thanks – that’s a good article – hope everybody in San Diego reads itSeptember 24, 2007 at 9:16 PM #85778bob007Participant
why do economists care if sellers do not reduce their prices ?
Are you being shills for transaction based financial industry ?September 24, 2007 at 9:25 PM #85779RaybyrnesParticipant
I thought the article was insightful. A more elaborate understanding of Behavioural Economics can be found in the book “Why Smart People make Big Money Mistakes.”
This is a very easy read.September 27, 2007 at 9:51 AM #86098AnonymousGuest
I wouldn’t sell at a loss until I absolutely had to move for a job change, divorce, death of a spouse, etc. Why sell at a loss and have to make up the difference between the sales price and your loan out of your pocket just so you can buy in the same market at a reduced price? I think the economists in that article need to step out of their thinktanks and start hanging around average people who have some common sense. (By the way, I’m sure all those 1990 Boston condo owners who didn’t sell because they didn’t want to lose money would do alright if they decided to sell now. I’ll bet they think they were pretty darn smart even though economists may not understand them.)September 27, 2007 at 10:13 AM #86099lnilesParticipant
How about selling at a small(ish) loss now vs. keeping a house and making monthly payments as the value goes down down down to a huge loss later? That’s what’s happening due to this speculative bubble.September 27, 2007 at 10:26 AM #86102crParticipant
If these people didn’t want to sell at a loss then they shouldn’t have:
1. Bought during a speculative real estate boom
2. Paid more for a house than they could ever hope to afford
3. Take a loan out that requires them to sell the house when payments adjust
4. Been greedy and tried to double their money on an already over-valued asset
Go ahead, don’t sell at a loss. Keep digging a hole of negative equity until you declare bankruptcy and give it back to the bank. People are as irrational out of the bubble as they were into it.September 27, 2007 at 12:01 PM #86112nooneParticipant
I understand what you’re saying Shari, but you would then be in the “If you don’t really want to sell then don’t put it on the market.” category. Nothing in the article say that you should sell at a loss no matter what. It’s perfectly fine to simply stay put and not sell at all. It’s just saying that if you really want (or need) to sell, then you will have to accept that you will be selling at a loss. Listing your home at a price that is too high is simply a waste of time and effort.
By the way, your list of reasons for selling at a loss also needs to include: Your monthly payment adjusts upward and you can neither afford the adjusted monthly payment nor re-finanace because you have negative equity in the home.September 27, 2007 at 1:16 PM #86130AnonymousGuest
I read the article twice and I didn’t get the impression in the example of Boston in the 90s the people who listed too high and didn’t sell had them on the market because they couldn’t afford the homes. I didn’t read all that into it.
By the way, selling at a loss isn’t easy if there’s no equity in the property. You either have to have cash to give the bank to make up the difference OR hope the bank will accept less than what is owed, which doesn’t happen very often.September 27, 2007 at 1:51 PM #86136Diego MamaniParticipant
Noone: thank you for educating people in this forum. All the article says is that if your house is worth, say, 200K today, then you are a complete moron if you list for 220K just because that's what you need to break even.September 27, 2007 at 3:20 PM #86154crParticipant
There is a big difference between not wanting to sell at a loss, and being forced to sell at whatever you can get.
I believe we will see more of the latter as ARM’s continue to adjust for 3-4 more years, and people sell at market value or face foreclosure. With prices declining there will be little choice for those that once thought their house would make them rich.
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