[quote=Irish]This little “updated” Craftsman is in a decent area of Northpark and should rent for $1500 or so per month.
If you do the math, and apply a GRM of 10 then the place would value about $180k.
During the recent bubble the GRM’s went nuts to over 20 and sales price became completely disconnected from the fundamentals.
I think prices in this area will come down to 10xGRM eventually, perhaps by late 2010 or 2011.
I’d wait a while to buy and watch the prices and GRM’s come back down to reality.[/quote]
That is not realistic.
At 15 GRM, people still go bananas even in crappier pockets. It is possible that this will change but it seems unlikely. If I could buy a place and the revenue could equal the full purchase price in 10 years (where I, the borrower, still get 30 to pay the bank), then everybody would jump in and the effective demand would drive the grm right back up.
The only places you see a grm that low is where rents are really high and interest rates are too.
Again, if rates spike (like to 15%) then that may happen.
But that seems an unrealistic projection as of today.
