SEATTLE, WA / ACCESSWIRE / November 2, 2021 / 2022 is right around the corner, and forecasts about the real estate market are rolling in. Some say the hot housing market will crash, and other headlines emphatically proclaim the housing market is NOT going to crash.
Consumers are obsessed with predictions. Research shows it's because human beings are wired to avoid uncertainty. A 2016 study by Nature Communications showed that not only do human beings respond to unpredictable situations with ever-increasing levels of stress, but that unpredictable events cause significantly more stress than even severely negative yet predictable outcomes.
In the case of the real estate market, Aaron Hendon, managing partner of Christine and Company at Exp Realty in Seattle, Washington, says, "We want predictions, and someone will always be there to supply them. The problem is that we are terrible about predicting what's going to happen in most areas of human concern."
Philip Tetlock, political science writer, currently the Annenberg University Professor at the University of Pennsylvania and the Wharton School of Business, and author of the New York Times bestseller Superforecasting - The Art and Science of Prediction conducted a long-running 20-year experiment that asked nearly 300 political experts to make a variety of forecasts about dozens of countries around the world.
After tracking the accuracy of about 80,000 predictions, Tetlock found that the experts did just slightly better than random guessing. Further studies by Tetlock showed that the more confident the predictors and forecasters are, the less likely they will be correct. Hendon says, "this means when you're watching that guy on TV scream about the housing crash that is coming, or not coming, he is, in reality, as likely to be correct as a coin flip."
According to Steven Levitt, co-author of Freakanomics, and William B. Ogden Distinguished Service Professor of Economics at the University of Chicago, "As an economist the best explanation for why there are so many predictions is that the incentives are set up…to encourage predictions, and without any sort of market mechanism or incentive for keeping the prediction makers honest, there's lots of incentive to go out and to make these wild predictions."
Hendon says, "nobody remembers the predictions that don't come true, and everyone remembers the ones that do. If I predict a crash that doesn't happen, I'll never mention it again, but if it does happen, I'll never stop bringing it up."
Hendon and his team at Christine and Company warn consumers the only prediction that is 100% guaranteed is the housing market is either going to be better, worse, or the same as last year. It is the only assessment any real estate professional can make if they are honest about their statistical likelihood to make accurate predictions.
Consumers' best course of action is to slow down and do their homework. Hendon says, "you should do what makes the most sense for you given your current set of circumstances, being careful to protect yourself from any miscalculation in market direction." He adds, "move forward with the firm knowledge that the future is always uncertain."
ABOUT DITCHYOURLANDLORD.ORG
Ditch Your Landlord believes that you work too hard to pay someone else's mortgage - and so long as you're always paying someone's mortgage, it might as well be yours.
Through practices and techniques that include education, advocacy, and negotiation, Ditch Your Landlord will help you navigate the roadmap to homeownership. Managing Broker Aaron Hendon is a top producing agent for Christine & Company with eXp Realty, a six-time winner of a Five Star Real Estate Agent Award, and author of Shortchanged by Shortcuts? 44 Surprising Ways People Rip Themselves Off When Buying or Selling Their Home. He's been featured on NBC.com, Realtor.com, and dozens of real estate podcasts. For more information, visit Ditch Your Landlord's Instagram, Facebook, or LinkedIn. For additional information, visit www.ditchyourlandlord.org.
CONTACT
Aaron Hendon
206-280-3312
aaron@candco.me
SOURCE: DitchYourLandlord.org
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