Spoiler alert: It probably is. But only if you live in something considerably larger than a one-bedroom condo.
By now anyone trying desperately to buy a house in 2021, listing one and getting 15 offers three days after putting out the hand sanitizer and disposable shoe covers, or just employed in the noble profession of real estate brokerage is suffering from a severe case of “What the bloody hell is going on?” The prices of homes have risen higher than frat boys sucking on a bong, while armies of rabid buyers seem to have come out of the woodwork with boatloads of cash, making offers larger than the gross national products of small countries.
Never in my 17 years as a real estate agent have I not been able to answer simple, basic questions: “In your professional opinion, what is this house worth? What would be a fair offer?” Because sadly, the answers to those questions are, “I have no frickin’ idea” and “How stupid do you want to be with your money?”
Theatre of the Absurd
Back in 2019, at a chic exhibit called Art Basel Miami Beach, the conceptual artist Maurizio Cattelan proudly included his installation Comedian. You know a work is Important because common people just hang Stuff on walls and adorn their homes with HomeGoods kitsch. But when an artist artfully displays a canvas or positions an objet d’art in a gallery just so, that’s called an “installation,” whether or not wrenches or power tools were involved.
Anyway, Cattelan’s installation consisted of a banana duct-taped to the wall. I sh*t you not. A piece of ripe fruit adhered to the sheetrock with Home Depot’s best. Funny, you say? A cynical joke to make people murmur and shake their heads?
It sold. For $120,000. Twice. Then a third time—for $150,000.
No need to get into the weeds on this: How does one sell the same banana to three different people? What happens when the banana(s) die of old age and turn into a pungent black goop? Can I buy a plantain at Whole Foods, glue it to my bathroom door and offer it to the cognoscenti for $200,000?
This whole situation is just darkly weird enough to make Kafka proud. But what does it have to do with your home?
Real Estate of the Absurd
Some real-life background: My clients recently made an offer on a house in Hillsborough, $19,000 over asking; just a year ago this would have been a typo on the Purchase Agreement. There were 34 offers on the house. The highest bidder got it for a cool $91,000 over the list price. That’s not a typo.
Those same clients, having now made and lost eight offers, made yet another one. Completely bypassing the age-old, battle-tested, common sense tradition of conferring with their real estate agent, visiting a home with him and asking for fine-tuned comps, they simply called me and said, “A house was just listed at 23 Main Street. Write an offer for $75,000 over the asking price.” I was still processing this flash-bang thrown at me when they followed up with, “Do you think that’s enough?”
I had no response. No advice. No words.
So. Is a banana worth $150,000? Is a house, not supported by any comps or a smidgen of common sense, worth $91,000 over what is already a jacked-up list price? The answer to both questions is—yes.
The price of wishes and dreams
An item is worth what a buyer is willing to pay for it. Think bottled fermented grapes (2015 Domaine Leroy Musigny Grand Cru, $101,260). A thin piece of cardboard with the likeness of a dead baseball player printed on it (American Tobacco Company 1909 Honus Wagner card, $3.7 million). A car six degrees separated from the one Kevin Bacon’s housekeeper drives to Wawa (Bugatti La Voiture Noire, $18.7 million).
Some people eagerly await Domino’s Pizza coupons in their junk mail (three-topping pizzas, $7.99 each). Others, like the late Senator Everett Dirksen of Illinois, see the world through a very different prism indeed: “A billion here, a billion there, and pretty soon you’re talking about real money.” Dangle a freshly-listed colonial with stainless appliances and the mandatory Live Laugh Love stenciled on a bedroom wall in front of a mix of those people and you get 2021’s real estate version of 1871’s Through the Looking Glass.
The 2021 Home Buying Craze has much in common with The Great Toilet Paper Craze of 2020. A Patient Zero noticed that toilet paper/houses would soon be in short supply and struck quickly and noisily, setting off an avalanche of buyers rushing headlong into the fray, panicked that they may be left out of the club of toilet paper/house owners and snatching up whatever they could like bedazzled tweeners at a Justin Bieber-branded scrunchie giveaway.
The results were as dramatic as they were expected. Buyers made offers thousands of dollars over any rational baseline, forgoing home inspections and appraisals. Those with a down payment never stood a chance; cash offers floated to the top of the heap like expired fish in a kindergarten aquarium. Fewer than 15 offers on a property were considered a slow weekend, with the record being set at the aforementioned 34.
Were the homes worth the obscene amounts of cash flung at them? Apparently so. Who are we to argue? After all, what’s the difference between a grossly overpriced house and a grossly overpriced bottle of wine or baseball card or car? Or banana?
Andy Warhol famously
admitted said, “Art is whatever you can get away with.” Home sellers aren’t creating value. They’re simply getting away with what would have been considered grand larceny a year ago.