Heinz, re valuations
valuations, per se, in my opinion, have nothing to do with it.
They have something to do with it, in the sense that they are ahead of themselves, but that does not mean that they will return to the norm.
A simple analogy:
Let's suppose that it is announced that a major metropolis will be building a new railway through one of its suburbs.
Prices shoot up in anticipation, from 150k by 50-75%., because once the railway is finished, landlords will be able to command much higher rents because of the convenience for renters.
Then, a few years later, they announce that there will be a major construction delay.
Do prices come back down to 150k, as if there were no new railway for that area on the way?
I think not. There is a pullback in prices, because certain people cannot deal with the carrying costs, and the delay in implementing rent increases, but the eventuality remains priced into the market.
The market will get a whack, but it will not in this 40 year cycle
go back to what reality used to be in the old days.
I think Shark's major up trendline at 8800 or whatever holds.
Vitas |
