A great post on California Housing Forecast.

Quoting mostly Hersh Shefrin, a professor of behavioral finance at Santa Clara University, as saying: “Sellers typically ask 12% over a reasonable sales price, but in a down market they will ask for 33% more. The reason: ego, and “aversion to assured loss”. Psychological pain, which is difficult to accept, is thus deferred.”

It’s pretty incredible how in normal times sellers are less greedy and in hard times, the other way around. It’s completely backwards. Of course, I remember those who sold in down times were those who actually listened to us and sold at a competitive price, regardless of their points of views on the market.

This last part actually nails it on the head: “Most buyers will come up against sellers who won’t negotiate, and this lowers sales activity. In down markets, inventory rises, but turnover drops. The lower sales activity is due to stubborn sellers, not lack of buyers. “

A great post and my, how true.