I was having a conversation about the current state of affairs in the real estate market with a colleague recently. He had helped a seller negotiate a deal and the seller was stuck. He didn’t want to give the buyer the last $500. The owner re-bought his house for $500.
This seller had been in his house since 1996 and felt that he had been losing money for the last 8 months, when the average house price started to fall.
The seller hasn’t lost any money. He wasn’t trying to sell his home 8 months ago. He is trying to sell it now.
In 1996, the average price of a home sold for was $198,450. The average home sold for $361, 415 in 2008. That means that on average, this seller saw a 182% increase in his investment. That’s a generous 12% increase on his investment.
What’s your net gain?