[FoRK] Does this real estate boom remind you of the dot-com boom?

Russell Turpin deafbox at hotmail.com
Tue May 17 14:11:26 PDT 2005


Sateesh Narahari:
>4. By historical measures (who knows what they are), the housing market is 
>still way underpriced.

The chief measure I know is the one that any investor
makes: does the rent cover the taxes, mortgage, and
upkeep, and provide enough positive cash flow on top
of that to justify the initial investment? By that measure,
it's hard to justify home values in many areas today. You
might be able to get $1,200/month rent from a $300K
home, which after taxes ($6K/year or more), upkeep,
and other expenses, is pretty small gravy from such a
large investment. Now, yeah, homes in nicer residential
areas long have demanded a bit of a premium over
their rent value. But when that premium keeps getting
bigger and bigger, and not just for the nicest neighborhoods,
but for any and all, real estate no longer looks like such
a good investment.

Of course, for the new breed of investor, it's all about
appreciation.




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