Due to the housing bubble Many house are not selling for muc

Due to the housing bubble. Many house are not selling for much less than their selling price just two to three years ago. There is evidence that homeowners with virtually identical houses tend to ask for more if they paid more for the house. What fallacy are they making?

Solution

I have been in this siutation Myself :(

The homeowners are assuming that there house is worth what they paid for it a few years ago and this is not the case due to the declining market. They do not want to lower their price below what was paid. It is a self-fulfilling prophecy with logic that if I was willing to pay more a few years ago, that means it must be worth more today. That is not true with the recent declining market.