March 6, 2006

Does P/E in real estate valuation matter?

The other day Dan at the Bayosphere linked to this site. One of the comments for that entry had this to say:

Home Prices and People’s Long-Range Dreams | Bayosphere
By-the-by, you DO understand that P/E is a real estate valuation model is almost useless, right?

Is it?

Does it make sense that if you buy a home and spend $4000 a month in PITI (Principal, Interest, Taxes, and Insurance) – that you can only rent it out for $2000 a month?

Maybe a P/E ratio of 1 is old and busted, and that a P/E ratio of 2 is the new hotness. Maybe homes in the Bay Area are meant to have Silicon Valley style P/E’s!

Maybe Taser can relocate here and help drive the P/E ratio to be closer to theirs… you know… 496!

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Comments (4) -- Posted by: burbed @ 5:00 am






February 23, 2006

Reader Question: Are these house prices for real?

Wow, a lot of people linked to this blog lately! Neato!

There were some questions in the comments on other blogs – I’m not sure why people don’t just go post comments here.

So… here’s a new category: Questions!

And today’s question I’m going to answer: “Are these prices for real?”

Yes. They are for real. And no, the price people pay will not be significantly lower than the advertised price – typically, you have to outbid others.

Got a question or a suggestion? Email me! burbed@-remove-burbed.com

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Comments (1) -- Posted by: burbed @ 10:01 pm