The problem with the Real Estate Industry

[COINTELPRO]

The problem with the residential real estate is the lack of sanity checks when it comes to buying a home. People rely too much on perceived value, rather than something that is indexed to reality. For example, if I buy stock in a company, I can always reference earning per share, book value, etc. to see how much a company is being speculated.

In the same way residential Real Estate (& property taxes) rely too much on what the last greater fools perceived and paid for the houses in the area. I think it would be better to use replacement cost (the cost to build the house yourself) also in appraisals. That way, if a builder wanted a million dollars for house, even though it cost half as much to build; a buyer would realize too much speculation is in the market and walk away from the deal. It would also send a signal to the market to buy a lot and build your own (increase supply) rather than buying a highly speculated house (decrease demand); sellers would drop their fantasy price to an amount that is reasonable.

It is the same principle we use when buying something on Ebay. We compare the current retail price to bids for reasonableness. If the price of the bid goes about the retail price, demand drops. As a result, there is limited over speculation of most items that are being sold as new which have a widely available retail prices. Buyers are no longer paying $2000 for a PS3 on Ebay.

 

[Fuckallyall]

It's the White Man's fault. People cannot make mistakes, they can only be victims. And if they made mistakes, it's because of the White Man.

 

[COINTELPRO]

It is the Ignorant Man Fault, I will drop this thread into the Business Section since it deals with business.

 

[Word]

It's the White Man's fault. People cannot make mistakes, they can only be victims. And if they made mistakes, it's because of the White Man.

Did you just blame the white man

 

[COINTELPRO]

This is basically a similiar practice to the government when building a figher jet or tank without a market price, they break out and price all the major components to build the item to make sure the cost is reasonable.

In the same way as the government, there really isn't a reliable market price because of the corruption, sheep mentality, and greed in real estate.

Once you get an estimate to build a similiar up to date house (adjust down/depreciate based on the condition of the house) you can subtract this amount from asking price of buyer to get the land value. Here you can make a less technical judgement call (still want to review land prices in the area) to plug in a number.

After all this, you have something to more logically judge the value of the house rather than what the last greater fools were willing to pay in an inflated market. Hopefully reality will set in with buyers and they won't load up with a subprime mortgage based on an inflated price; Housing will be affordable for everybody and 2 trillion dollar crashes in real estate wealth won't happen or be smaller.