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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (1683)	2/19/2002 8:57:23 PM
From: MulhollandDrive	Respond to of 306849

>>The only proof that prices are excessive is when prices decline.<< <gg> The thing of bubbles...speculation. Time will tell. As far as excessive valuations go...making excess of $100k....based on current lending standards must purchase a dump....must live in dump over 5 years to get money back in current market.... something wrong with that picture? I think so... Have a good evening.

To: Tradelite who wrote (1683)	2/20/2002 8:59:05 AM
From: Oblomov	Respond to of 306849

>>real estate prices are whatever prices the buyers (...) are willing to pay. The only proof that prices are excessive is when prices decline. This is just an extension of the "greater fool" theory of stock valuation. There are nevertheless several fundamental bases for real estate valuation as in the valuation of any asset; for example, the ROI on rents of comparable properties is a good yardstick of over- or under-valuation. Over time, it is a reasonable expectation that inefficiencies in the market are corrected, despite the wishes and hopes of the market participants. The illiquidity of the RE market makes this a more gradual process, but that doesn't mean that it can't or won't happen.