[quote=sdrealtor]Dr B
Again you are stretching a RE agents role beyond what they are charged to do.[/quote]
Perhaps. But you know when someone walks in the door whether they have any business buying or not; you’re one of the good guys and at least try to do the right thing by your own account.
I’m not talking about you, however, I’m talking about systemic problems. Market incentives just don’t align agents’ and consumers’ interests.
[quote]Additionally houses dont always have easy to identify well-understood values in relation to things like incomes and prevailing rents. For example, prices in SF and NYC have never in recent history been anywhere close to being in line with either.[/quote]
Even in those two extreme and artificially distorted cases (rent control in both cities, etc.), the laws of economics still hold true: beyond a certain percentage of household income lies mortgage madness–sooner or later.
Lots of people in both cities have been beneficiaries of bubble economics, so they aren’t the best examples. I was working in Silly Valley and The City in 1999-2000–it was quite a party, but it wasn’t real life. That party faltered but never really stopped for certain parts of that crowd (I know because I still talk to and work with some of them).
[quote]Here’s another more local example. In 2001, the house next door sold for $550K and it was way out of whack with rents and incomes in the area. Obviously that house was worth considerably more a couple years ago but it has never been worth less and is still worth about $250K more than that. By any long term quantitative measure one could have looked at back in 2001 it was not a good deal. History of course tells a very different story and it will never approach that $550K price again.[/quote]
Accounting for inflation and selling costs, it would have to be worth $730k+ for the owner to even get his money back out. I’m not sure what you’re trying to say here, but it doesn’t take going back a decade in nominal dollars to incur a loss.
I do agree that in an absolute sense something is “worth” exactly what someone will pay for it, but is that what we’re talking about?
[quote]PS you didnt hear any of us on this board saying it was a great time to buy in 2008 or 2009.[/quote]
No, everyone was afraid of being called a permabull or worse. 😉
