The “Luck of the Irish” my grandfather used to say. He used the phrase to describe the unfortunate (though often funny) things that happened in his life. Recently, I’ve used it to describe my experience as a seller in this part of the real estate cycle. After a long year, my wife and I finally sold our home. The selling price was 24% below our original asking price. It was also 41% above our total investment in the house. We owned the property for only five years. That’s an 8% annual return on an investment that also provided us shelter and enjoyment.
I actually feel quite lucky. We beat the long-term U.S. average of 7% annual appreciation in home value–in a down market. In an ultra-low risk investment, like a home, that’s quite good.
The problem with most sellers today, is that they still think it’s 2004, and they are priced accordingly. Similar homes in my old neighborhood are still listed 50% to 75% higher than our selling price. In my view these owners aren’t really selling, they’re just publishing their “I’ll move for this…” number. These people distort the numbers of homes on the market and the pace of inventory turnover. The market’s tough, but dillusional sellers make things look much worse than reality.
The problem with such unrealistic pricing in the market, is that potential buyers see it and sit on the sideline waiting for prices to drop back to Earth. Thus the cycle is prolonged. It’s the luck of the Irish!
