Is Your House Overvalued?

The New York Times try to ask the question, Is Your House Overvalued? They ask the question and give you the tools to think about it, but they give you no idea if your hours is over valued or not.

The article supports the idea of rental ratio when it comes to housing price. This is the idea that the rental market dictates what a house should cost to sell. They compare it to a price earning ratio for a stock. The idea is that if the rental market is softer then the purchase market, people will not buy homes.

This raises the question of worth. What premium is it work to own property? What is it worth to be protected from the next rental bubble? What is it worth to be able to sell your house later?

People have been debating these issues in Silicon Valley for years now. The rental market has got a lot softer, but the housing market has not. We are still not out of the shadow of the boom in terms of real estate. I feel the current housing prices are counting on another tech boom. I am still not sure the idea of the rental ratio is enough to explain this market.


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