Behavioral Biases in Real Estate Markets

Abstract

This study investigates the influence of behavioral biases in real estate markets, addressing a notable research gap in behavioral finance. Despite extensive research in stock markets, psychological factors affecting decision-making in real estate remain underexplored. The research identifies key biases influencing stakeholders, analyzes their impact on property pricing, investment strategies, and market efficiency, and examines strategies to mitigate these biases. Utilizing a mixed-methods approach, data were collected from 280 real estate investors, buyers, sellers, agents, and developers through structured questionnaires and semi-structured interviews. The findings reveal that behavioral biases significantly affect market outcomes and highlight the need for tailored strategies to enhance decision-making processes. Recommendations are proposed for industry professionals and policymakers to minimize adverse effects. This research contributes to a deeper understanding of psychological factors in real estate, paving the way for future studies to address this crucial area.