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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (16046)1/15/2004 2:30:42 PM
From: gpowellRead Replies (1) of 306849
 
In the long-run the instantaneous out-of-pocket cost to hold a house against depreciation equals the rent rate.

You have stated that above average rates of return are followed by below average rates of return and that this observation can be used to determine if any particular asset is overvalued. However, this ignores permanent demand shifts operating in a supply-constrained environment. In such an environment, expectations can produce above normal rates of return followed by historical rates of return.
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