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

To: GraceZ who wrote (16036)	1/15/2004 12:37:39 PM
From: Tradelite	Read Replies (1) \| Respond to of 306849

Nice analysis from an intelligent, rational person, Grace. But do you think that is what the poster meant when he said homes in the DC area are "overvalued"? If he did, I accept your analysis. If not, I'd still like to know where the percentage figure came from. For one thing, I'd like to know how to determine the "right/fair/appropriate" value for my own house if this is the case in the DC area.

To: GraceZ who wrote (16036)	1/15/2004 12:45:07 PM
From: Tradelite	Read Replies (1) \| Respond to of 306849

<edit>One more thing about your analysis, Grace. I'm trying not to get off-track on a tangent, so pardon me for sticking to my original points. We were talking about the "value of homes", not the value of owning one to a specific individual buyer. Every person has to make his own analysis of buy vs. rent, but the market's determination of home values is another matter. And yes, equilibrium might be a little disturbed in some areas of the country right now. But I've spent untold hours trying to make both buyers and sellers understand that prices and values in the real estate market are set by the market and there is absolutely no sense in arguing with them, no matter how irrational you think they are. "If you want to argue with the market, don't buy, don't sell. Wait until you think everything fits your definition of what it should be. And let me know how long you think it might take for you to agree with the market." <<GGG>>>

To: GraceZ who wrote (16036)	1/15/2004 12:56:59 PM
From: gpowell	Read Replies (1) \| Respond to of 306849

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 Rent is determined by current supply and demand, while home prices are in part determined by investment potetential, or future supply and demand. Home prices may be quicker to adjust to shifts in rational expectations while rents only adjust when these expectations are realized. The spread simply reflects preferences and constraints under equilibrium conditions and cannot be used to determine value, except under equilibrium.