Chickens and today's real estate market

Gertrude Shelby asked her readers a question in a 1926 issue of Harper's magazine: "Did you ever keep chickens?"

Ms. Shelby, a journalist, was using a metaphor to explain the rapid inflation of property prices in Florida in the 1920's. "Put down a pan full of big scraps, and the hens come running. The first ones grab big pieces and depart rapidly. ... The others see the pieces in the beaks, and instead of realizing there's plenty more in the pan, they chase the hens who got the first pieces. That's resale psychology."

Here's how that analogy applies today. A few months ago when we were at the top of market Sellers made a hefty profit (from 2000-2005 we had 145% appreciation). In the following months as the market began to cool most sellers were in denial and refused to reduce their price because of what the home down the street had sold for. Even today Sellers look at the asking prices of their neighbors and say, "My home is better than that so I want to ask more than my neighbor." The result is they are both overpriced.

Sellers can keep chasing what others got last year and miss their opportunity today!