Friday , 22 November 2019

Superstition in Real Estate

Michele Wood
Michele Wood, Director of Research at Valbridge Property Advisors

Would you buy a home if the street address was 666? How about 13? Which is better—an address with 4’s or 8’s? While many people don’t consider themselves superstitious, 10% of Americans suffer from “triskaidekaphobia,” or fear of the number 13. Even more dramatic, the Stress Management Center and Phobia Institute of North Carolina claims that the US economy loses between $800 and $900 million every Friday the 13th due to reduced activity caused by “paraskevidekatriaphobia,” a tongue-twisting word for fear of Friday the 13th.

How does this affect real estate? In real numbers, both lucky and unlucky, it impacts addresses and list prices. According to Zillow, homes with the numbers 666 in the list price sell for 3.2% less than their market peers, although oddly, homes with a street address of 13 sell for 2% higher. The number seven bumps a home price 1.8% and “316,” as in John 3:16, boosts it 1.2% above its peers.

The number 666 as a street address is not very common, due to the association of the number in Christian numerology as the “number of the beast” in the Book of Revelation. The City of Irvine, California has passed regulations prohibiting new single-family home developments from including the numbers 69, 444, and 666. Why 444? More on that shortly. A couple in Minnesota petitioned to change their 666 address after several years of sideways looks and trouble getting service personnel to come to their home. For a $100 fee, they can now tell friends and vendors they live at number 668.

It isn’t just Western superstitions that have value impacts on addresses and list prices. A study done in 2013 at the University of British Columbia found that in communities with a significant Chinese descent population, houses with addresses ending in 4 sold at a 2.2% discount and houses ending in 8 sold at a 2.5% premium.

These results were consistent with the findings in Zillow Talk: The New Rules of Real Estate (2015) by Spencer Rascoff and Stan Humphries, who analyzed list prices of homes where the last digit was either a “4” or “8.” In Chinese culture, 4 is considered a very unlucky number as the word in Mandarin sounds very similar to the word for death. Conversely, the word for the number 8 sounds like the word for prosperity and is considered auspicious. In their analysis, the authors found that in areas where less than 10% of the population was of Chinese descent, there was a negligible difference in price. In areas where the population of ethnic Chinese was higher than 10%, homes with a list price ending in “8” sold for 1.5% more than the expected value. That difference equated to an average of $2,400 on a median home in the U.S. at the time of the study. In the same areas, listing a home with a “4” in the price lost the sellers an average of 1% of the market value.

These cultural trends can have big impacts economically. In 2014, China surpassed Canada as the largest source of foreign buyers of residential real estate in the U.S. In 2018, over 40,000 homes were bought by Chinese nationals. One agent in New Jersey who specializes in Asian clients claims that 20% of her buyers prefer that the house number contain an 8 and will refuse to buy anything with a 4 in the address.

This preference plays out in commercial real estate as well. In 2016, a Chinese developer bought a prominent office building in Sydney’s CBD for the notable price of $88,888,888. More and more developers are also catering to Chinese clientele world-wide by omitting floor numbers that contain the number four (4, 14, 24, etc.) and removing unit numbers with four. This is a familiar practice, echoed in the American and European custom of skipping floor 13 in high-rise buildings.

According to Juwai.com, an online platform for Chinese buyers of global real estate, “Listings in the U.S. with a triple eight in the price receive about one-third more online views than listings with none.” Of course, buyers are more savvy than superstitious, so the fundamentals of the property and deal must be solid. However, numerology is a good way to signal cultural knowledge and grab attention in marketing properties.

It pays to do your research on the demographics and make informed and culturally sensitive decisions in pricing. But what if your property is already suffering under an unlucky number? It might be worth following in the footsteps of the couple from Minnesota and securing an address change.

Have any comments or would you like to submit an article of your own? Email comments@appraisalbuzz.com for more information.

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About Michele Wood

Michele Wood
Michele Wood is the Director of Research for Valbridge Property Advisors in Houston. She has worked in valuation for 16 years and specializes in providing support to the Litigation Specialty Practice Group in Houston. She can be reached at mwood@valbridge.com.

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