[One Thousand Characters a Day] Dr. Park Wongap's 'Real Estate Psychology Class' <1>

Editor's NoteAfter the high-interest rate storm originating from the United States, the blind belief that real estate prices would continuously rise has been completely shattered. It has become a reality that it is difficult to diagnose market trends solely based on variables such as supply, the real economy, or policies. When following recent real estate market trends, irrational and unreasonable behaviors that defy common sense frequently appear. ＜Real Estate Psychology Lessons＞, written by Won-gap Park, Senior Real Estate Specialist at KB Kookmin Bank, analyzes the inner workings of the people driving the real estate market from multiple angles using simple psychological terms and theories. The author advises always being cautious of one-sided views and maintaining a balanced perspective to see the world clearly. Word count: 1022 characters.

The real estate market is a psychological space full of misunderstandings and prejudices. In the short term, the market fluctuates more due to speculation and rumors than facts. The saying "Buy on rumors, sell on news" proves that the market moves more on rumors than on news.

Generally, many of our actions are illogical. We often spend more time regretting after acting than thinking before acting. Also, we tend to trust people simply because we are close to them. Even though fraud usually comes from familiar people rather than strangers. We know these thoughts are irrational and unreasonable, yet we find it hard to change them easily. This is because humans are emotional beings before they are rational beings.

When meeting acquaintances and having various conversations, talk about where one lives is never missing. An interesting point is that most people think their own neighborhood is the best. If someone speaks ill of their neighborhood, their face quickly hardens.

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Could the "Our neighborhood is the best" mentality be because living in the same neighborhood for a long time creates affection, making everything seem good? We feel affinity toward familiar objects. Concrete buildings may seem bleak cement blocks at first, but once we get attached, they become as lovable as children. Even a shabby hill in front of the house feels warm and cozy like a mother's embrace after climbing it frequently. In fact, before we even reason the reasons for liking or disliking something, we tend to think positively of what we already know. Psychologically, this is called the "mere exposure effect."

Just because we know a brand, we often pick products without properly evaluating their quality. The same applies when employees buy stocks of their own company or local residents buy stocks of companies with headquarters or factories in their area. While it is easier to obtain information about these companies, the bigger reason is the preconceived notion that a familiar company is a good stock.

Familiarity does not necessarily mean goodness. It can lead to judgment errors. Investing driven by familiarity can result in failure. Many people exhibit a familiarity bias, where what is familiar is considered not just good but safe.

- Won-gap Park, ＜Real Estate Psychology Lessons＞, Mate Books, 19,800 KRW