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Loss aversion in housing appraisal: Evidence from Italian homeowners

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  • Lamorgese, Andrea R.
  • Pellegrino, Dario

Abstract

Loss aversion is considered a driver of downward price rigidity in real estate markets: during downturns – when market price of their house is below the price at which they purchased it – loss averse homeowners do not evaluate their houses at the former one but anchor the resale price to the latter price. As a consequence, prices are sluggish to adjust downward, time to sale becomes longer, ask and transaction prices differ.

Suggested Citation

  • Lamorgese, Andrea R. & Pellegrino, Dario, 2022. "Loss aversion in housing appraisal: Evidence from Italian homeowners," Journal of Housing Economics, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:jhouse:v:56:y:2022:i:c:s105113772200002x
    DOI: 10.1016/j.jhe.2022.101826
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    More about this item

    Keywords

    Loss aversion; Prospect theory; Housing market; Households surveys;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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