Myth is so powerful it explains the run up in home prices. Myth is so powerful it takes on life of its own and some memory seems to last forever. There are endless examples in history but the one I use to explain the housing boom is the CA gold rush lasting from 1848 to 1855.
I think the gold rush a good analogy for the run up in home prices. It’s true buyers who jumped in toward the end of the boom found themselves in similar circumstances to miners who arrived late to CA - debt ridden and disappointed.
Taking the power of myth into consideration explains why it took so long for homeowners to accept the real market value of their homes. The power of myth explains all those overpriced listings representing homes that sat unsold from 2006 onward.
Here in the greater Wilmington, NC area, list prices continued to climb through 2007 but sales slowed from early 2006 as Buyer’s rejected asking prices. In January 2008, our Wilmington, NC real estate market began falling. By then, many homes had been listed at unrealistic prices for two years.
At listing appointments, I saw the affect of myth close up. No matter how much proof I brought to listing appointments, disbelief was the prevalent mindset. I heard stories about what neighbors had been offered that were myth. Often, no matter how much data I provided, I heard over and over again, “I’m not going to give it away!” As years passed, I continued to show how long properties had been for sale, how many listings had expired, how many different agents were involved and, still, more often than not, disbelief .
To stay sane in the face of so much confused thinking, I would fall back on an old saying, “My minds made up, don’t confuse me with the facts.” It fit the situation well but it was frustrating to see how long it took for disbelief to become acceptance and properties eventually sell. As years passed, homes were reduced and finally closed for less money than they would have brought months or years earlier were they initially priced correctly.
This year, starting in spring, I saw reality replacing disbelief as properties began coming on the market priced in accordance with recent sales. This fall, I’m seeing more new listings at market prices. And, those correctly priced and properly prepared homes are selling!
It's almost 9 years after our prices began to rise. The CA Gold rush lasted for 8 years. Perhaps it takes that long for myths to take their place in history as all myths do
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