Ryan Foley and Sarah Tassielli of Toronto, whose wedding got postponed by the COVID-19 pandemic, went looking for a house early this year but kept getting outbid.In years to come, some researcher will surely mark the phases of the pandemic by what we raced to buy: toilet paper when we feared a virus we knew little about, dogs when we sought company during lockdown and now houses as we crave security – and square footage – in an uncertain future. Home has never been more of a haven.
And when buyers are willing to make an offer, what happens? They’re pitted against each other like gladiators – if all the other gladiators were invisible. Reason requires information. And yet we have more information when shopping for toilet paper than when making the biggest purchase of our lifetimes.
On paper, they should have excellent prospects. They both have good jobs: Ms. Tassielli works in marketing for Telus, Mr. Foley as a kinesiology lab technician at Ontario Tech University and working toward his PhD. They have a “sizeable” down payment for a house worth somewhere between $700,000 and $900,000, and a combined household income of $200,000. The pandemic delayed their wedding but also made them keen to upgrade after four years of living in a 500-square foot apartment.
Meanwhile, a national lockdown has given everyone plenty of time to stare at their current four walls and find them wanting. Buyers can peruse endless photos of staged houses and slick, drone-shot videos of places where other people are definitely, absolutely, living happier, and certainly tidier, lives. Ms. Tassielli, who works in marketing, suspects plenty of those visuals are enhanced – certainly living rooms and bedrooms look larger and prettier online than in reality.
Economists have wrestled with the irrationality of human beings for centuries. “Feelings were these annoying gusts of wind that threw off your navigation,” says Sam Maglio, an associate professor of marketing and psychology at the University of Toronto Scarborough. That’s not wrong. A long, frustrating day at work tends to spill over at home. Whether it is rainy or sunny influences our moods.
In one experiment, the theory’s Dutch authors, Ap Dijksterhuis and Loran Nordgren, asked subjects to choose the best apartments based on detailed information on four units. Those who were distracted more often made the best decision compared to those left to deliberate about their choice. Prof. Nordgren has compared conscious thought to a flashlight that can only illuminate certain facts at a time, while your unconscious takes in the whole picture.
The dynamics of bidding wars – the gambling and strategizing for a coveted item – capitalize on the herd mentality. The uncertainty around pricing adds more confusion. In experiments, people will often place more value on the difference between $100 and $200 than $1,100 and $1,200.
If the media do string operation in real state market so we can see some surprising News, people can buy a single room apartment but the qualified for bigger house
I will be glad to miss it. Perfectly happy to see idiots wasting their money hard earned or inherited.
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