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August 24, 2011
How Much Is Your Home Really Worth?
The Gap between Homeowners’ Expectations and Market Price
Homes sell slowly in today’s weak housing market. Median time-on-market for non-distressed homes is about 5-6 months and longer for distressed properties. While low mortgage financing costs and relatively low prices are good news for potential homebuyers, many other factors continue to be impediments to a more robust recovery.
In this article, the role of homeowners’ pricing behavior is examined. It shows that the gap between homeowners’ price expectations and expected market prices rises as conditions in the housing market deteriorate. Homeowners continue to set price expectations that lag behind market declines, resulting in slower sales.
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