Maybe it’s time to love your home less?
After all, it is possible for the emotional attachment to your house to eclipse more practical matters — your overall finances.
For instance, homeowners tend to always expect that their homes will increase in value, so that they stubbornly refuse to lower their asking price and subsequently risking the possibility of not selling at all, according to a recent report in the Wall Street Journal.
A study in the Quarterly Journal of Economics observed that homeowners make the mistake of latching onto the price they paid for their home without any regard for the prospect of depreciation.
Another example is the tendency to overlook factors such as commute time and proximity to social activities in favor of physical features. Many people move to bigger homes that are farther away from work, but the tradeoff may not be even.
The Journal cited a 2008 study in the Scandinavian Journal of Economics that found people who had longer commutes were essentially less happy that those with shorter commutes.
“If you’re moving to a place far away from your friends, but it has nicer stuff, it’s not a great deal for your happiness,” Elizabeth Dunn, a psychology professor at the University of British Columbia, told the paper.
Other mistakes that homebuyers make include forgetting to account for furniture when making the decision to purchase and not having the foresight to understand that owning a house can, in fact, be stressful. [WSJ] — Cathaleen Chen