Quote:
Originally Posted by photon
You call it a bubble but you don't provide anything to support it. During the high tech bubble it was obvious things weren't real; companies trading for huge amounts with no forseeable possibility of them ever making a real profit, etc. What stats do you see here that show you it's a bubble? Why is this the beginning of a crash rather than a normal market taking a breath?
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Sure, lets value a condo like we value any other investment. My girlfriend has been told she can rent her place for $1700. Units in her building sell for over $400,000.
Income (Rent) $1700
Expenses (Condo Fees) $200
Net Income: $1500
Annual Income: $18,000
Required Rate of Return: 10%
Valuation: $180,000
Looking at this another way:
Annual Income: 1500 x 12 = $18,000
Annual interest on $425,000 @ 6% = $25,500
... No chance of ever making a profit!