It’s not the newest, nicest, biggest in MM, and not even in a great area of MM. If the best would land around $325K, then this should land around $300K, making the price-to-rent ratio 10.6 (300/(2.35*12)), which seems way too low.
The historical norm for the price-to-rent ratio in SD, before the recent bubble, was around 16 (which makes this home $450K).[/quote]
Obviously it’s hard to know just what will happen, but I would hate to make a generalization on just one home’s asking rate. That’s probably someone who needs to take in that much in order to pay their mortgage each month. It doesn’t mean that they are going to get it. Looking at it from another perspective, that home sold for $242,500 in 2000. If it sold for $325 in 2008 that would be 34% increase in 8 years. That’s over 3.7% per year. What kind of ROI should we expect?
Really we would need to look at actual rents being paid, and we would need a sample size larger than 1.