Thursday, August 26, 2010

Why is housing so sticky on the way down??

Why didn't US home owners sell, but hold on until negative equity and foreclosure hit them like an inevitable Tsunami.

Why, on the Gulf Islands or Whistler, where some properties have been listed for well over a year and sit unsold, are the owners dropping the price 1-2% at a time.

We are hard-wired by evolution NOT to take a loss, even if that is the logical thing to do. Take a small loss now or a bigger loss later.

How often have you bought a stock and watched it dip down past your stop loss, watched it bounce up reinforcing the thought that you were right to reject the loss, and then the thing dives down under the sea taking your hard earned money with it.

We have all done it. We cannot help it.

Nortel was one of those which took thousands of Canadian RRSPs into the abyss.