“This proves that fundamental value is 10-12x rent in San Diego.”
Kind of – it shows that 10-12X is fundamental value at troughs, not most of the time. I’d guesstimate normal/average as halfway in between, or about 15X, still a pretty hefty ownership premium, and unfortunately out of reach for potential buyers such as yours truly.
Rich people in small Texas towns drive old Ford pickup trucks as they cruise through main street checking on all the 100-year-old commercial buildings they own.
Rich people in West Texas drive similar old Ford pickup trucks from section to section (1 section = 1 mile square) of their ranches repairing wells and cattle troughs.
For the record, they buy their blue jeans at WalMart. The only luxury item they spend money on is a nice pair of boots, which become encrusted in cow ____ within days.
“Its the water situation out there you need to worry about, not housing.”
LOL I’m actually in the water business here. Las Vegas has the highest fresh water use per capita of any large city in the world. We’re also spending $billions to build pipelines to wells all over sparsely-populated central Nevada so LV can steal, I mean lease, their water rights! Lake Mead these days looks like a huge, mostly-empty bathtub.
The Henderson (Las Vegas) market rose 50% in the 12 months from July 2003 to June 2004. The market DIED during the last half of 2004, and all the signs were there that we were at the top – rising inventories, falling sales volume, etc. I bought in March 2004 with a 3-month lease-back and sold (panicked, to be honest) in July 2004, glad to get out with enough “profit” to cover my 4% commission and closing costs. Then interest rates went back down and the market rose another 25% in 2005. This mid-2006 top looks exactly like the mid-2004 one – the point is, you can’t say for sure until history proves out the timing.
