Riverside Realtor Blog - Alma Dizon

Alma shares her experiences and observations as a Realtor in Riverside California.

Wednesday, August 16, 2006

On Declining Consumer Confidence and Paralysis in the Inland Empire

The Press Enterprise has an article about people being surprised by the sudden decline in the real estate market in the Inland Empire. Actually, it's not a surprise at all as the 30% annual increase in values 2 years in a row couldn't be maintained. One consultant cited a lack of consumer confidence as key, and I think that's what this is all about. Prices are so high that, even with continued low interest rates, buyers are understandably intimidated by the monthly payments they'd have to take on. That and the number of properties on the market, many of them in far less than pristine condition, is enough to paralyze any shopper.

The ambivalence of the home buyer faced with too many choices is something to behold. I look for the usual hints of the happy shopper (beaming smiles, caressing the spouse, lots of digital photos), and instead, I see frowns, nervous glances, the need to look at all the details but without satisfaction. This scene is followed by the inability to write up an offer, week after week, month after month... (I generally dump these buyers unless they're personal acquaintances or referrals of personal acquaintances, in which case I can't...)

Barry Schwartz' book Paradox of Choice offers a lot of insight into how consumers don't deal well with too many choices. When faced with too many (in one case, 2 were too many) choices between marked down items, people became too undecided. And as we all know, with indecision comes discomfort.

Here's a link to the Press Enterprise article on the decline in the area real estate market:
Press Enterprise article on market decline

Here's a link to an excellent review of Schwartz' book from the New Yorker last year:
New Yorker review of Barry Schwartz book Paradox of Choice


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