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The Real-Estate 'Winner's Curse': Study of Nearly 14 Million Home Sales over 20 Years Shows You Don't Want to Win that Bidding War
Research of nearly 14 million sales finds homebuyers in bidding wars overpay by about 8.2% and face 1.9 percentage points higher mortgage default risk, especially among minority buyers.
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The real-estate 'winner's curse': Study of nearly 14 million home sales over 20 years shows you don't want to win that bidding war
Economists at the Rochester Institute of Technology looked at a dataset covering 30 U.S. states, looking for patterns in resales and mortgage defaults.
·New York, United States
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Winning a bidding war isn’t always a win, research on 14 million home sales shows
In today’s hot housing market, winning a bidding war can feel like a triumph. But my research shows it often comes with a catch: Homebuyers who win bidding wars tend to experience a “winner’s curse,” systematically overpaying for their new homes. I’m a real estate economist, and my colleagues and I analyzed nearly 14 million home sales in 30 U.S. states over roughly two decades. We found that people who paid more than the asking price for their …
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