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

To: X Y Zebra who wrote (37763)	8/13/2005 10:48:56 AM
From: John Vosilla	Read Replies (1) \| Respond to of 306849

I think cap rates on commercial would be tied to the 10 year treasury which is a bit lower than when fed tightening started. So folks buying today at 3-5% caps are not building risk, illiquidity and management into their business models. As to residential owner occupied in the end it comes down to perceived costs of owning versus renting. A perception of 20% appreciation makes any overpriced property look appealing when they look at perceived equity buildup versus the net higher monthly cost of ownership versus renting. A disagreement I always have with Mish and the deflationists is to really end the speculation and stupidity going on we really need higher rates. A continued decline in rates and Japanese style downturn aint gonna cut it in this country. Folks would get bailed out, multiples on overvalued assets would expand even further, America will continue to grow but a slower pace and do what it does best which is spend.