Oct 31

Home Buyers are Predictable

Home Buyers are Predictable

Home Buyers are Predictable. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Home Buyers are Predictable. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Are you a highly conscientious person? Then you’ll probably want a fixed-rate mortgage. Somewhat neurotic? Then you’d likely rather own than rent.

A new study suggests that a person’s personality traits are predictive of his or her real estate decisions. Researchers gave more than 1,100 respondents a personality-assessment test, asking them to rate themselves on several personality traits, such as openness (e.g. artistic and imaginative); conscientiousness (efficient and organized); extroversion (sociable and energetic); agreeableness (forgiving and undemanding); and neuroticism (tense and moody). The respondents were then asked about their real estate preferences, including type of mortgage, desire to rent or buy, and investing in real estate or stocks. Researchers controlled for several variables, such as level of education, home ownership, age, gender, and income.

The results showed “a very solid correlation” between personality and real estate choices, co-author Danny Ben-Shahar, a professor at Tel Aviv University, told The Wall Street Journal. High scorers of neuroticism, for example, showed a preference for home ownership over renting and tend to opt for mortgages with lower loan-to-value ratio — likely because neurotic people tend to be more averse to risk, Ben-Shahar says.

Meanwhile, respondents who scored high on agreeableness or extroversion, as well as conscientiousness, showed a preference for investing in real estate over stocks. Researchers speculate that conscientious people are more willing to postpone gratification and likely to make a less-risky investment while also diversifying their portfolio.

Ben-Shahar told the Journal that personality traits won’t always match a real estate profile exactly, but individual personality can have an influence on the way people choose to live.

The findings are to be published in the Journal of Behavioral and Experimental Economics.

Source: “In Real Estate, Your Personality Makes You Predictable,” The Wall Street Journal (Oct. 29, 2014)

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