182% Increase In House Prices

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?