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

To: Tradelite who wrote (16109)	1/16/2004 12:16:29 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

I'm speaking in macro terms. The micro, or one person's view, is what makes up the macro, what makes up the market. The market goes to extremes when it attempts to discover price both on the upside and downside but it is the long term trend where the real value lay. When price moves through extremes of that long term trend it is reasonable to expect it to revert to the norm in the future. Above average returns are followed by below average returns. It's not just how I feel about owning or renting, it's basically how markets act.

To: Tradelite who wrote (16109)	1/16/2004 12:28:48 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Question: When you sell your house, are you going to "overvalue" it, like everyone else is doing at the time.....or are you going to "undervalue" it simply because you think it's the right thing to do and are feeling charitable toward those irrational buyers? If I sell a house that I feel is over valued I don't lower the price, that would be silly. But the reason for selling might be that I expect the market to fall to a rational valuation and I don't want to lose that gain by holding. You sell investments that you expect to be valued lower in the future and buy what you expect to be valued higher in the future. One can say that real estate is over valued when there is no rational way to expect prices to be higher in the future. Prices may in fact move higher after this point but this is because the market is made up of people who aren't entirely rational in the short term but in the long term, over thousands of transactions they are. There's more money to made trying to bet on things reverting to normal than to be made trying to discover how irrational they can get.