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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: bozwood who wrote (16065)1/15/2004 3:38:02 PM
From: TradeliteRead Replies (2) of 306849
 
For pete's sake, what type of response were you looking for?
Here's what you wrote:

<<"Overvalued and overpriced are poorly understood words"
Only in times of overvaluation

To value something on the basis of other similar assets is not the best way. Tulip bulbs were fairly valued on the basis of the tulip appraisor's estimate which was based on other tulip bulb sales. We all know how that turned out (and before you respond as such, I am well aware that houses are not tulip bulbs).

It is better to set the asset's value in relation to something else. For instance, median home prices are now 3.2x median income. This is the highest ratio in history, I believe, and the highest since 1970, I am sure. Or for another example, median incomes have increased about 6% since the end of 2000 and home prices have increased 23%.

This all is probably futile trying to point out to you, though, Tradelite as I don't believe you will even respond to the points I raise. >>

You made your points. I made mine about how real estate market value is determined. I'm sorry real estate is not selling at prices which reflect your figures re: median income growth and that it isn't valued "in relation to something else."

You perhaps should address your concerns to the appraisal and lending community. I can't change the system for you. And do you see what you're doing here? You're arguing with the market, again. It won't work. The market is trumping your ideas about how to look at value and going its own way, propelled only by the people who are doing the buying and selling--and lending.
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