Wednesday, October 10, 2007

Dealing with Uncertainty

The WSJ had an article yesterday "Nothing can kill drive and inspiration like a long wait." While the point the author was making was rather interesting...the examples were poorly done. Luckily I kept reading and found some very interesting tidbits of research which I think apply nicely to those of us waiting out the housing cycle. In fact, I think it may partially explain some of the "irrational" behavior we see. I know there are times I get so tired of waiting, I am ready to buy a house...any house....but eventually my rationality returns when I compare my potential PITI to my rent.

"The torment of waiting arises partly from an uncertainty that seems to gather over time."

"Research shows that waiting for uncertain outcomes can be more uncomfortable than adjusting to the worst of them...."

"Waiting drives some of us to make dumb decisions. In a study conducted by Gregory Berns, an associate professor of psychiatry and behavioral sciences at Emory University, respondents were given an option of receiving an electric shock now or a lesser shock after waiting. Roughly a third opted for more voltage sooner."


semloh said...

this makes sense and explain how sometimes I am just ready to give in a go buy the first house I see.

And then I look at what I would have to give up to be able to afford a house in Folsom and it really brings me back to earth.

it's almost like having to choose between a "sure death" electric shock now and... who knows what later...

wrong moves said...

Double whammy!!

You get the bigger initial shock, then a monthly reminder of how bigger that shock was compared to what it would be if you waited.

Yeah, sign me up.

Jacob said...

It certainly feels that way for me. If there was no bubble and prices were where they should be I would be in the house I want right now.

Sometimes it is frstrating waiting. But then I see a house I like drop 10, 20, 50k in a few months and I feel better.

Paul said...

Amen. We know intellectually that we need to wait to buy ... but as we watch prices drop, it is so hard to be patient. Personally, I would like to be in my own home where I can change things to suit my style, build a year round outdoor room, put epoxy on the garage floor and all those good things! And there are so many good "deals" out there now ... But I know that there are more good deals to come, and that buying an equivalent house even at today's lower prices, will cost me $18,000 year more than my current rental costs (even after taxes). Maybe we should start a "be patient; don't buy yet" support group!

buying time said...

Paul....that's exactly why I started this gives me something to channel my anxiety into, and at the same time I can take comfort and commiserate with others in the same situation!