SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Residential Real Estate Crash Index
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Tradelite who wrote (16028)1/15/2004 12:32:48 PM
From: GraceZRead Replies (3) of 306849
 
If I was rational about deciding whether to invest in real estate as opposed to rent using the difference between the two to invest in another financial asset I could in fact determine whether real estate was over valued regardless of what other less rational investors were willing to pay.

You are making the assumption that the buyer doesn't have alternative options for a dwelling like renting and that home values aren't at all related to rents. One can argue that housing is overvalued when the premium portion (the cost in excess of the cost to rent) rises significantly above what a like property can be had on the rental market reducing the expected return. You take the difference and compare your expected return to investments carrying similar risk. The expected return can be figured based on the historical rate of return and the fact that any rational investor would expect a regression to the mean (which is significantly below the rate that real estate has risen in the last five years).
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News