DFW Real Estate STALEMATE: Why Buyers and Sellers Won’t Budge

Why are homes sitting longer on the market?
Why aren’t sellers dropping prices faster?
Why does the whole real estate market feel...stuck?

Great questions. And today, I’m using game theory to answer them.

Game theory is not like Fortnite tournaments or Monopoly marathons that end in family feuds.

It’s actually the branch of math that studies strategic decision-making — where what you do depends on what you think someone else will do, and what they do depends on what they think you will do. It’s like playing chess... but in real life.

It’s not math with equations and charts. Nope. It’s just all about human behavior — ambition, caution, second-guessing, bluffing.

And today, we’re going to play this out in a market you might not expect: housing.

Because if you’ve been paying attention — whether you’re buying, selling, or just up late Zillow-scrolling — you know the real estate market feels...off.

 Prices aren’t crashing. They’re not soaring either.

Buyers are cautious. Sellers are hesitant. Mortgage rates are frozen.

And everyone’s waiting for someone else to blink first.

The market isn’t broken. It’s stuck.

And to understand why, we’re going to look at a few classic games from game theory — The Prisoner’s Dilemma, Chicken, the Stag Hunt, and one surprise one at the end — and figure out:
Which game is the real estate market playing right now?

And more importantly — who’s winning?

First up: The Prisoner’s Dilemma.

You know this one. Two prisoners, separate cells. If they both stay silent, light sentences. If one rats the other out, freedom for the snitch, heavy time for the other. If they both rat, they both get punished.

In real estate terms? Think about sellers. If every seller priced realistically, homes would sell. But each seller secretly hopes their house is the exception. They think, “Maybe I can hold out for that pandemic-level price.” But if everyone does that — prices stay high, buyers pull back, and no one wins.

Except... that’s not quite what’s happening. Not entirely.

So Next let’s look at The Game of Chicken.

Two drivers speeding toward each other. Whoever swerves first is the chicken. But if neither swerves? Crash.

This feels closer to today’s market. Sellers are holding the line on prices — they don’t want to cut. Buyers? They're holding back, waiting for better deals or interest rate drops. Each side is daring the other to flinch first.

And there’s something about housing that makes the stakes high. Sellers might think: “Hey, I’ve got a 3% mortgage — if I don’t get my number, I’ll just stay put.” Buyers think: “If I can’t get the right house at the right price, I’ll rent a little longer.” So both sides are dug in, engines revving.

Sounds like we’re getting close with a game theory idea.

But let’s look at The Stag Hunt.

In this game, two hunters can either team up to hunt a stag — a big payoff — or go it alone and hunt rabbits — smaller payoff, but safer. If both trust each other and go for the stag, they feast. But if you go stag-hunting and your buddy chickens out for the rabbit? You go hungry.

This, this feels eerily like today’s real estate market — especially on the seller side.

Imagine you’re a seller. You could price reasonably — hunt the rabbit — and get a sale, maybe not at peak pricing, but decent. Or... you could price optimistically, hoping that buyers will jump back in, that rates will drop, that other sellers will hold out too, and you’ll all feast together on a roaring comeback.

But that requires trust. Trust in things you can’t control: the economy, inflation, mortgage rates, buyer confidence. And trust only gets you so far — especially when mortgage rates stay stubborn, and buyers aren’t exactly lining up.

And when that trust fades?

You’re not really hunting anymore.

You’re waiting each other out.

Until you suddenly find yourself in a War of Attrition.

And here’s how this game works.

You have Two players. One prize. Each player decides how long they’re willing to wait, burning resources the whole time. The prize goes to the player who holds out the longest — but the longer you wait, the more it costs you. Winning isn’t free. It’s just slightly less painful than losing.

In nature, animals do this all the time. Two birds fighting over a piece of food. They posture. They stare each other down. Neither wants a bloody fight — it’s risky and exhausting. So they just... wait. Whoever gives up first loses.

In real estate right now, that’s what it feels like. Sellers have a prize in mind — a certain price for their house. Buyers have their own goal — a lower price, a better deal, maybe lower mortgage rates. But neither side wants to move first. Sellers think: “Maybe if I wait, rates will drop and more buyers will flood the market.” Buyers think: “Maybe if I wait, prices will finally come down.”

The cost?
Time. Carrying costs. Lost opportunities. Maybe sitting on a house for months. Maybe renewing a lease you hate for another year or losing on the house you really liked because someone else couldn’t hold out as long. It's like both sides are locked in a staring contest — but their eyes are watering, and they're both wondering, How much longer can I keep this up?

And in a classic War of Attrition, both sides lose the longer the game goes on. The seller pays the mortgage, property taxes, insurance — month after month — on a house that isn’t selling. The buyer watches prices not fall — and risks being priced out if rates go up instead of down.

But the winner? It’s the one who outlasts the other side’s patience.

There’s even a twist: sometimes, it’s not the best house or the best offer that wins. It’s just the person who can endure the most pain — or who blinks second.

So if you’re wondering why your neighbor’s house has been listed for 143 days... or why your friend has been “waiting for rates to come down” since 2022... now you know. War of Attrition.

It’s not about who moves first. It’s about who moves last.

So, buyers and sellers there they are, locked in a War of Attrition. But if you zoom out just a little, you’ll see there’s another player in this market. And they’re not playing that game.

They’re playing something different.

It’s called a Stackelberg Competition — and if that sounds like a fancy econ term, it is. But stay with me, because it’s actually really simple.

Here’s how it works:

In a Stackelberg Competition, one player moves first — publicly, loudly — and everyone else has to respond. It’s not a stare-down. It’s a chess move.

And the players making the first move in the real estate market today? Homebuilders.

Builders are in a different position than individual sellers. They can’t sit around forever with unsold inventory — it’s expensive to carry unfinished homes. They have quarterly earnings to hit. Shareholders to please. So what do they do?

They move first.

They cut prices. They offer incentives — mortgage rate buydowns, cash toward closing costs, even free upgrades. Builders are the first movers, setting a tone for the market. They’re basically shouting: “Hey buyers! Here’s what it could cost. Don’t like the resale market? Come over here.”

And because they’re moving first, they force everyone else — individual sellers, even other builders — to react. A seller who’s not offering anything looks stale next to a brand-new home with a 5.5% interest rate deal slapped on it.

It’s strategic.
Builders are making the first move to capture demand now — not next year, not when mortgage rates drop, now. They give up a little margin in exchange for speed. In game theory, that's called being the leader — and if you move first well enough, you can shape the rest of the game to your advantage.

Meanwhile, individual sellers — the ones stuck in that War of Attrition — they’re sitting there, blinking in the sun, wondering why no one’s coming to their open houses.

So what’s the takeaway here?

If you’re a seller? You’re in a slow-motion staring contest. If you’re a buyer? You’re trying to outlast the clock. But if you’re a builder? You’re playing chess while everyone else is playing chicken.

And when you’re trying to buy or sell in a market like this, it’s not just about timing — it’s about understanding the game you're in.

Knowing when to move, when to wait, and how to make decisions that actually get you where you want to go.

That takes patience, honest advice, and real market insight — the kind that only comes from experience.

I’m Jennifer Templeton, Realtor and Broker Associate at Keller Williams Rockwall, and if you're looking to buy or sell in the Dallas-Fort Worth area, I’d love to my experience to work for you.

You can reach me by phone or text at 214-803-4444, or by email at Jennifer@TheCrestedgeGroup.com.

And finally, if you liked this episode, tell a friend. Or better yet — send it to that friend who's been "waiting for mortgage rates to drop" since 2022. You know the one.