Adam Ash

Your daily entertainment scout. Whatever is happening out there, you'll find the best writing about it in here.

Saturday, May 28, 2005

Is your house overvalued?

The stock bubble screwed a lot of us when it went pop. Will the housing bubble ruin your property value? This article tells you how to guage the real value of your house. After getting rich in the stock market fever five years ago, and losing it all in three weeks, I promised myself to buy real estate next time I have money, so I read this bit avidly:
"Take the price of a typical house in an area, divide it by the amount that house would cost to rent for a year and the result is what might be called a rent ratio. In San Francisco and San Jose, Calif., the rent ratio has spiked to nearly 35 on average -- or about equal to the price-earnings ratio Microsoft's stock reached in 2000. In West Palm Beach, Fla., and San Diego, the ratio is almost 30. In New York, Miami and Los Angeles, it is about 25. In only a small number of areas (Washington, Baltimore, Las Vegas, Jacksonville and the Long Island suburbs of New York) are rents rising at a decent clip. Nationwide, the rent ratio remains around 17."
NOW you know. Work out your rent ratio. If it's over 35, sell. You're living in a bubble.


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