Sunday, December 5, 2010
Baby Boomers High-tide Expectations
Due to a psychological phenomenon known as 'anchoring', many baby boomers have had their expectation of the eventual sale price of their homes set by the recent bubble in property prices. These 'High-tide expectations' will continue to influence their expectations of the eventual sale price of their home for years to come. This is compounded by the tendency to treat the home as their largest asset and retirement piggy bank. And for some Boomers, their home may be their ONLY retirement asset, increasing resistance to sell at anything less than the 'anchored price'. In many cases, these homes are paid off and entirely owned, so their is little financial pressure to sell a home for less than the expected value. Thus, Housing prices can remain sticky for years to come, until Boomers have run down all their other financial assets, and are forced to sell their homes for less than the 'expected' value.