The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: John Vosilla who wrote (25011)	11/4/2004 5:45:11 PM
From: David Jones	Read Replies (1) of 306849

>>>>more overpriced than even the average Bay area property<<<< Oh I don't know about that I can show you some pretty damned over priced properties around here.) What strikes me with pricing is the relationship to X's price over that particular area's household income. Your example is obviously high for an investor with a CAP of 2 and a price 10 times the average area income. And I agree a poor investment any way one looks at it but for most home buyers looking for a residence the CAP rate seldom enters the picture. Although one should consider such numbers for simple prudence. Prices in relationship to income for a buyer should be foremost in the decision making process imo. If one holds single family property this relationship of price to income, being below the average, I would think lowers the risk of said investment. Regardless of rents as a P/E, price to average income to my thinking is the tell when considering risk in today's market. If the average multiplier in California is 8.7 and I can buy at half that number I believe I would sleep better is all I'm saying.

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