Quote:
Originally Posted by Laker14
Highlighted above: Your response to an argument you can't refute with logic.
Money is money. People aren't stupid. People may agree to pay the bond, but its existence or lack thereof is an influencer, whether they are buying a car, or a home. It still comes down to whether they want to pay for it, and how much they are willing to pay for it. Call it a bond, call it a "dealer add-on", to the buyer it's still money, and the less the buyer has to pay, the more attractive it will be.
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Drug induced referred to a car purchased being the same as a house purchase, when there are factors of 10 differences in price and length of paperwork and loan durations, and asset lives. they are not the same comparisons, just like relating CPI to house prices. CPI is the price of liquid every day living. House assets are illiquid and seldom bought and sold within a year. The topics are similar, price increases, but the logic doesn't work
When there is a financial transaction, there is a buyer and a seller. You just described the buyers viewpoint of every house being unique, and the desirability of the intangibles by the buyer, not disagreeing there, and there being price insensitive buyers
What the conversation is about is the seller's point of view, So from a seller's point of view, if the house is priced at market and you decide to recoup your paid off bond by adding that cost to the market price of the house. So market price plus 7% remaining on a 10% originated LTV bond. What the effect of the higher pricing between two identical houses is that the seller is waiting for that unique buyer to find the desirability worth the extra price. Your glossy generalization misses the point that the sale might never happen if the price particular buyer never comes along. Which is why you see houses on markets for 6 + months when housing markets are normal
The factors I described in the prior posts would cause that desirability to afford the increase above market price, or the seller waits along time randomly hoping that the buyer who is much less price sensitive will be looking at that particular house for sale.
Your point is that there are price insensitive buyers, the fallacy with your point is that the seller most likely doesn't want to wait an abnormally long time to sell the house if a motivated seller, ie, needs the money sold to maintain lifestyle. . ie, can only afford to own one house at a time, which i would presume is the majority of the population, with whom real estate professionals have to sell to every day.
and finally, yes behavioral economics shows that many to most people handle money in stupid ways, extremely suboptimal spending. The higher the price tag, the less number of people who can make stupid financial decisions.