How "Zestimate Deficits" Are Locking Sellers Into Pandemic Home Prices

Zillow revolutionized house hunting in 2009 with its must-have app, now a staple for aspiring homebuyers. But here's the real plot twist – while home prices have started a downward dance in many markets, sellers are locked onto pandemic-era Zestimates.

This is sending ripples across the housing market in ways that might just blow your mind.

Let's hit the rewind button to grasp this paradigm shift. Back in the day, homeowners couldn't keep tabs on their home's worth like they do today. Yes, they would have a general idea that their home's value was rising, but nothing close to the accuracy of a Zestimate. But now they have this extremely specific number in their minds that many tracked obsessively during the pandemic. After all, who doesn't like watching their biggest asset skyrocket in price?

The result is a whole new breed of sellers like we've never seen before.

Picture this: In a Zillow-less world, someone bought a house for $500,000 in 2019. They knew it was soaring in value during the pandemic. Fast forward to 2023, and they're selling for $650,000, raking in a cool $150,000 profit. That's happiness right there.

Now, in our Zillow universe: The same buyers snagged a $500,000 house and watched its value rocket to $725,000 during the pandemic. When 2023 rolls around, they're looking to sell, but interest rates are playing hard to get, and sellers are as scarce as unicorns. Their realtor puts a $650,000 price tag on their home. Cue the drama – they're not celebrating; they're fuming. It's not a $150,000 gain; it's a $75,000 loss in their mind. They're dead set on listing it at $725,000, thumbing their noses at anything lower.

This is a massive shift in seller psychology.

Sellers under the same home circumstances, but with polar opposite reactions is the ultimate twist of the 2023 housing market.

It all boils down to "Loss Aversion," where people dread losing more than they crave winning. The science backs it up – folks place double the importance on the fear of losing compared to the lure of gaining. This explains why getting today's sellers to budge on price feels like pulling teeth.

Here's the kicker – hardly anyone's talking about how this epic shift in seller mentality is transforming the housing landscape. Why, you ask? It's just too new. We've never experienced it before, so the policy wonks are clueless. But make no mistake, it's here to stay and it's going to rock the real estate world for a very long time to come.

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