7
May

Real state prices in Spain and bad decision making

Escrito el 7 Mayo 2007 por Juan Toro en Uncategorized

John Authers a journalist from the FT described the Spanish consumers as bad decision makers in terms of their real state buying decisions. He grounded his appreciations on arguments from behavioural finance widely discussed by Robert Shiller in his book Irrational Exuberance. Though Irrational Exuberance dealt with the dot com boom instead of the real state boom, the same principles apply. According to Shiller, traditionally the trend on housing prices has moved closely with that of rents, as any asset pricing valuation model would predict. But in the last years they have been diverging widely. Prices have increased by 182 % and rents have barely moved. This movement has been exacerbated in countries like Spain. Shiller summarizes the principles of behavioural finance that has led many to buy a house without much looking at any valuation model or economic reasoning as follows. First, homebuyers are affected by wishful thinking; they all believe their house is a winner. Second, the human brain filters and processes ideas in terms of stories rather that documented facts. Stories from relatives of friends blur our thinking on the value of housing. Last, money illusion. People only report their buying and selling prices. Transactions costs- notaries, taxes

Comentarios

Apartment Directions 23 Enero 2010 - 08:20

This is good place to live, where each and every kind of facilities are available.
Due to well looking infrastructure lots of person like it to live in this apartment.
Anybody can walk for work by transport.
Parking facility is also available, who have car and other vehicles.

Thanks

Apartment Directions

http://www.apartmentcafeteria.com

rabaty 31 Agosto 2013 - 16:15

You should check this out…

I saw this really great post today….

eamonn213 15 Junio 2016 - 06:51

Sad to hear that there are making bad decision on real estate prices. If you are interested I provide homes away from your home to make living abroad much simpler. And have a perfect collection of apartment suites. http://www.dharmahomesuites.com/philadelphia/philadelphia-apartment-suites/

Dejar un Comentario

*

Utilizamos cookies propias y de terceros para mejorar nuestros servicios y mostrarle contenido relacionado con sus preferencias mediante el análisis de sus hábitos de navegación. Si continua navegando, consideramos que acepta su uso. Puede cambiar la configuración u obtener más información aquí. Aceptar