Attachment is one powerful emotion: when a 2001 study took a hard look at attachment to home, neighbourhood and city, guess which attachments were strongest?
To house and city—and not to neighbourhood. And women are often more deeply attached than men, with physical setting bubbling up all sorts of emotions, themselves in turned tied to social status and, of course, simply how we feel about ourselves at the time we decide to relocate or just move.
We cue ourselves through a haze of biases: in reading housing advertising (another space ripe for disruption, likely via mobile video), we respond very differently to ‘well-cared-for’ than ‘granite countertops’ or ‘landscape design.’
Even more so, the more specific an advertising cue is (‘Sub-Zero’ trumps ‘frost-free’), the bigger the aspirational lift. None of this, of course, is captured in people’s thinking about price: the influence is all on the emotional side.
One of the most compelling studies on real estate purchasing behaviours examined ‘feeling at home’ as a prime driver of purchase decisions—and discovered a complex set of behaviours, very close to relationship factors in dating and marriage, because ‘feeling at home’ isn’t about sense of place so much as it’s about…care.
Feeling cared for is a huge cue—but one EXPERT/ease has never heard mentioned in purchase decision research. Not once.
This cue, which encompasses emotional values sociologists have identified like ‘welcoming,’ drives the deepest triggers of all, when we ‘fall in love with’ a house. These cues and feelings are often very difficult to put into words but suggests that there’s far more going on in people’s hearts when they visit a house than in their heads.
‘Emotional intelligence,’ stock-in-trade for successful real estate professionals, bubbles up the importance of hope..And research shows hope represents something like a 15% premium on asking price.
In other words, we’ll pay 15% over asking price to address our emotional belief that our finances will improve when we buy this particular house.
This perception—we’ve all felt it—says the object of our desire is ‘the place to be.’
Price effects of anxiety (‘We need a place by July 15th for Dave’s new job.’) are significant. And we’ve all had friends offer prices in bidding wars comprised of phone numbers and birthdates. That’s as much psychology as sociality: feelings affect not just what we believe but how we express those feelings socially.
So too housing prices.
Finally, sociality means we’re open to what sociologists term the ‘materialization of home’—an experience we first had as kids, playing Monopoly. Homeowners are investors; their investment belief systems are influenced by their personal experience of factors like deposit insurance to fading memories of the Great Depression, perhaps modulated by the sub-prime mess of 2008.
Here’s a take-home for an election year: politicians are at their peril in intervening in the mortgage market.
Why? Because what legislation or regulation ever addressed the real estate market’s deep triggering behaviours: a need for independence, a sense of autonomy and the incentives of self-improvement?
Another bias? You bet.
Looking ahead, COMPASSpoint, the successor to EXPERT/ease’s well-received year-end wrap on the 2014 mortgage and real estate markets, is already in the making.
We’re looking for insights and contributions. If you’d like to participate in what’s become a marketplace must-read, email us at firstname.lastname@example.org. We’d love to hear from you.