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Politics : Ask Michael Burke
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To: BGR who wrote (78387)3/23/2000 9:24:00 AM
From: Freedom Fighter  Read Replies (2) of 132070
 
BGR,

>Rents are rising at a slower rate than asset values. So, great theory, doesn't work in practise, hence rejected.<<

Rents have a tendency to move more slowly than the actual costs of ownership (taxes, utilities, price of asset, repairs etc..). I would suspect that's because leases are sometimes fairly long and may not incorporate everything even if they have some annual adjustments. Ultimately though, there must be a pretty close relationship or all the owners would go bust. Certainly there would be fewer buyers if you couldn't get a fair return on your investment - which in turn would have a leveling effect. Similarly, people are always doing own vs rent analysis when they are deciding what to do for themselves. The leveling effects must just lag a bit.

Wayne
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