How well do the Irish remember what price they paid for their homes?

It may be the single biggest purchase in their lives but most Irish homeowners have less than total recall when it comes to remembering just how much they paid for their homes, according to new research published by the Central Bank.

More than 60 per cent of those surveyed claimed to have paid substantially less for their homes than they actually did with most of those questioned getting the purchase price wrong by tens of thousands of euro.

More than 20 per cent of those polled underestimated the price they paid for their home by up to €30,000 while closer to 30 per cent were out by between €30,000 and €120,000.

Could the mechanism be regret minimization?:

“Perhaps people are trying to reassure themselves that their losses as a result of the property crash are not as great as they are,” Mr McQuinn told The Irish Times. “We can’t really say that with 100 per cent certainty but given the scale of the negative equity involved in many of the homes, it certainly looks that way.”

The article is here, the research paper is here (pdf) and for the pointer I thank Aidan Walsh.

Comments

Well, no one's expecting a drunk Irishman joke. Not at all.

How many people remember how much they paid for Microsoft, Sun Microsystems, or JDS Uniphase? How many will remember what they paid for Netflix, Tesla, or Twitter 10 years from now?

they will remember they paid a lot less. hopefully they held

Yes, but should our memory not be random rather than systematically biased downwards (as in this study)?

There's two stories:

One is, twenty years ago, I bought this house for $5 and change, and it's worth a million today.

The other is, twenty years ago, I bought this house for $80,000, and it's worth $120,000 today.

Which story is more fun?

I've heard it said that stock market traders tend to remember their wins and forget their losses. That definitely wasn't true in my family. If my dad had held on to his Simplicity Pattern stock, he would have been a millionaire in the 1960's when a million bucks was a seriously large amount of money. Instead, he sold for a modest profit and watched the stock go up and up and up for year after year. (Decades later it crashed, of course, but if he had held on to it, he would have sold long before that.) This was a subject of dinner table conversation throughout my childhood.

That was until the missed opportunity to buy a very nice property in 1972 for $55,000 that's probably worth about $4-5 million today. My parents had bought another property from the owner in 1968 for $40,000 and mom still owns it (probably worth $3-4 million today), and the owner was very pleased with my parents. My parents thought a lot about buying the other place too, but when they went over there to discuss it, a flea landed on my dad's knee and stayed there during the whole conversation (the owner had dogs) which dad didn't notice but my mom did. That flea pretty much decided mom against it, so my parents turned down the offer. That missed opportunity replaced Simplicity Pattern at dinnertime.

I used to call that the Million Dollar Flea, but it's really the Four Million Dollar Flea.

C'mon, the comparison is not fair. Most investors have many stocks, perhaps different tax lots of the same stock bought at different times. They wouldn't remember what they paid for them.

I have ONE house. It was very expensive (for me at the time). I know exactly what I paid for it and always will.

Irish and hyperbole never go together.

Research in marketing (e.g. Dixon and Sawyer) suggests that most customers in a supermarket don't know the price of items they just put in their cart.

There's also a lot of research showing we don't remember things that happened to us in the past all that reliably -- nostalgia ain't what it used to be.

Often one member of a couple handles the finances. In my experience, this means the other doesn't remember much. I just asked my wife what we paid for this house, and she didn't know.

Plus, Ireland adopted the Euro in 1999. So some people would have to do a currency conversion.

This is part of a survey for a bank (i.e. being right or wrong has no consequences for the respondent)

But this together and these results don't seem surprising to me.

I'd like to see this study in another country.

I know exactly how much we paid for our house thirty years ago. Trying to find one that was an appreciable height above sea-level was quite a search in these parts, so for many years I could also have told which contour we are on.

This is obviously a case for one of those tiresome German philosophers:

"I have done that," says my memory. "I cannot have done that" -- says my pride, and remains adamant. At last -- memory yields.

Or perhaps memory is not really a good snapshot but when you try to remember you are actually unconsciously using other related facts to estimate & these other facts are biased by today's factual prices.

I just tried to remember (it was 30 years ago) and what first came to mind was the mortgage amount, which was 20% less than the purchase price.

I immediately wondered how many of them actually paid in euros.

People being ashamed of bad decisions trying to avoid ridicule?

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I wonder how much of this is that they remember the "Purchase Price", but not all the bank fees, government taxes/duties, mortgage insurance, etc that could easily add a significant chunk to what the property actually cost them over and above the actual property price.

About a month ago went through this with our current house, and managed to work out that it actually costed around $50K more than I would have said it cost if asked before actually working it out in detail.

I remember precisely what I paid for my house. I'd like to forget it.

Memory is not the issue. This is just a poll on how much someone is willing to tell a stranger how much they paid.

My wife's family lives in France. I find that they frequently have trouble discussing amounts of money that date back to when they made the purchase in French francs. I think it is worth considering that the Irish in the study may have had the same problem.

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Answers: "So the Irish wouldn't conquer the world".

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