Real Estate Questions for M.F.

[CamusEatsSumTum]

I think someone questioned you publicly here before, and I think its a good idea because the posters here are more intelligent here than in other sections of this website.

My first question has to do with inflation in real estate prices and this so-called bubble.

Has there previously been a real estate crash that we can study?

How exactly are real estate prices set, similar to stocks, that a house is worth as much as someone will pay for it, so for there to be a crash, several people would have to lower the price of the house they are selling.

Ive read that recently several investors have entered the real estate market which is responsible for the boom: Why would these investors decide to sell at a lower price, as opposed to just holding their appreciating asset and renting it out?

How can you judge whether a property is at a good price? Is it in relation to the amount it would cost to rent a similar property. How do you figure the rent of a property? Is it a percentage of a properties total value?

sorry if these questions are too vague or stupid or broad based.

if you have any book recommendations that would be great.

[Neurotoxin]

Google Japan's real estate bubble, but I don't think any part of the United States is as crazy as that was. I don't recall exactly, but there was a section of Tokyo that at one time was worth more than the whole of California.

Btw this is the wrong forun for this, try "stock market".

[tek]

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I've read that recently several investors have entered the real estate market which is responsible for the boom: Why would these investors decide to sell at a lower price, as opposed to just holding their appreciating asset and renting it out?

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If you are talking about being at the top of a bubble (right before prices start dropping), then smart investors would sell quickly to those who still think there is upside. The reason is you don't want to be stuck with a house that is dropping in value and have to wait 5-7 years to breakeven. And during that time there may be a hard times to keep it rented out.

Think Houston, TX awhile back...

On the other hand if you go into an area that has bottomed out for a couple years and buy cheap, you could make a lot during the next recovery.