Re: real estate questions....
There was a very good article in Economist last year about real estate bubbles (forgot which month). They mention that one way to price real estate is by summing up the future discounted rent. This is identical to valuing a stock based on future discounted earnings. So based on this, the article concluded that real estate is overvalued.
The article also mentions that people are more reluctant to dump their property if it drops in value compared to a stock. So there is a possibility that the bubble will not burst but instead there will be a gradual decrease in price over many years.
It is also mentioned that the real estate market is less efficient financial markets (forgot the exact reason tho).
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