When my wife and i bought our modest, inner-city Washington rowhouse in the summer of 2001, everyone on the block was shocked at the high price we paid. They thought their new neighbors must be nuts. In a sense, we were. Insanely, we'd sold our old house before we bought a new one. That had made us "highly motivated buyers," which is Realtor terminology for "total saps."
It is spectacularly unwise to go into a business negotiation when you are far more desperate than the other party. Consider an analogy.
Auto mechanic: Your car needs some work.
You: How much will it cost?
Auto mechanic: Well, lemme see . . .
You: If I don't get this car back to Carmine "The Worm" Vermicelli in good shape by Tuesday, I will be encased in cement and become part of the footing of the new Woodrow Wilson Bridge.
Auto mechanic: Sixty thousand dollars.
My point is, yes, we bought high. But I think you know where this story is headed. Things worked out swell. Conservatively speaking, our house is currently worth $16.7 billion, which is several million times what we paid for it. The price we paid for our house in 2001 would currently purchase, in our neighborhood, a fully restored lawn ornament. (This is despite the fact that my neighborhood is just two miles radioactively downwind from the White House, if you get my drift.) (So to speak.)
America's cities are in what is considered a volatile real estate boom -- or we were, at least, three weeks ago when this column was written. What this means is that if my wife and I sold our house right now, we would make a small fortune. The problem is, we would need to spend all of it immediately on a comparable new home, unless we were willing to move to a place with much lower real estate prices, such as Yemen, or live in a packing crate, or, you know, die.
So, we are staying put in our suddenly expensive house, vaguely uncomfortable about the situation. Our home has become an item of substantial worth but no practical value. We are like idiot thieves who have stolen the "Mona Lisa" but cannot sell it without getting arrested.
Like many homeowners, my wife and I are taking our minds off this painful paradox by attending "open houses" in our neighborhood, checking out other homes for sale at ridiculously inflated prices. It makes you feel good.
"Hey, this house is selling for $1.2 million, and it's made out of chicken wire and Styrofoam!"
"Here's one for $1.6 million, and it doesn't have floors!"
"Here's a two-holer outhouse for $750,000!"
At these open houses, it is easy to distinguish curious neighbors like my wife and me from actual potential buyers (many of whom have previously bid irrationally high on houses, only to lose out to someone even crazier). The curious neighbors are casual and smiling. The actual potential buyers have a hunted, furtive, vulnerable look. As they pass by, I have an overwhelming urge to say to my wife, in a Thurston Howell III accent, "We simply must offer $230,000 over the list price, Consuela, and throw in the older Porsche."
Local real estate agents have discovered that, in this hot market, bad is good. They love properties that permit them to euphemistically list undesirable features about a house ("transitional neighborhood," "handyman's delight," "a rodent fancier's dream," etc.) because that will attract buyers hoping to capitalize on lower competition. Soon, all pretense will go out of these listings:
"Alice Kramden's kitchen decor!"
In all likelihood, at some point soon, this overheated market is going to suddenly chill like a cup of black coffee poured into a glass of ice, creating a soft drink with a bitter undertaste representing both the dashed dreams of homeowners and poor metaphor selection. My wife and I know this, as we sit here, feeling a little silly, outside in our back yard, which is the size of a plastic turtle sandbox, contemplating our 16-foot-wide, seven-room mansion.
Gene Weingarten's e-mail address is firstname.lastname@example.org. Chat with him online Tuesdays at noon at www.washingtonpost.com.