Anonymous_IHB
New member
[quote author="CapitalismWorks" date=1245366474][quote author="Anonymous" date=1245362568][quote author="CapitalismWorks" date=1245306401][quote author="Anonymous" date=1245303371][quote author="CapitalismWorks" date=1245302929]I thought your point was something about ethics or boors or something or other. If you are saying that engaging realtors and owners in realistic discussion of pricing will not influence their decisions, I believe you are mistaken.</blockquote>
If you were selling luxury cars, and some self-confident dude making $6/hr came by and told you your luxury car was only worth $3000 to him, not $40,000 that wouldn't be exactly helpful would it? Just annoying.</blockquote>
Strawman. Cars don't lend themselves to fundamentals based valuation like homes.
We are talking about engaging realtors and owners in a discussion of pricing models. I believe that most realtors, lacking training in economics and/or finance, lack the background to evaluate real estate pricing beyond the comparables method. I imagine the average seller is worse. As the very least some understanding of the various potential determinants of price (NOI, rent equivalent, income to price, financing terms, etc) may lead to a faster pace of normalization for pricing.
Put it this way. If every person selling a home (agent or owner) knew the information contained on the this board, where do you think prices would be? Do you think that by not-knowing is the ultimate destination for prices altered?
I think if every seller today realized that his/her property would be worth 10-30% less by next year, based on fundamental pricing metrics, they would be far more likely to reduce their price now.</blockquote>
Actually I'd argue that cars are more likely to be easy for fundamentals based valuation than homes are. The reason being that if car sales are slow - you can just ship it to another state, or even another country. It's a truer free market. Whereas, if you have a gorgeous mansion but it's in Detroit ... can't ship it.</blockquote>
Homes can be rented out readily, offering a discounted cash flow based measurement of valuation. I don't many individuals who have a buy-to-let strategy with autos. In terms of mobility with cars, you are talking about liquidity, the demoninator in a standard DCF model. However, rental cash flow, the numerator is still non-existent for cars.
Additionally, for cars, there are frictions that limit the flow of vehicles based on demand thereby decreasing liquidity. There are varying emissions laws that necessitate alterations, transportation costs, import/export if moving overseas, and the cost of carry on any vehicle.
I really would like to hear what fundamentals you apply to auto valuations...</blockquote>
I don't have the analysis, but I feel a lot better trying to figure out the value of a car than a house. For a car, there are thousands and thousands of identical models out there to compare it to. You can look them up on eBay or just search the internet and find the identical ones for sale all across the US. If your local dealer has a stupid price, you can just buy from a different dealer, or ask another dealer to find one in another state and ship it to you, or get put in an order at the factory and wait for it. If you are a Canadian and the US cars are a better deal, you can cross the border and bring it back. Vice versa for US buyers (ex. several years ago, US exotic car dealers would cross to Canada, buy a car with say 10,000 mi on it to make it "used", import it to the US, swap out the odometer, and sell it). Plus you can even go to message boards or consumer reports or whatever and figure out what the maintenance issues are going to be. Re: buy to let - I guess there are no car leases or rental car agencies in your model.
Houses on the other hand all seem somewhat unique (ex. different lots, lot sizes, streets, locations, etc etc) - it's a lot harder to figure that out for me. Especially since current and future interest rates makes so much of a difference in affordability for purchasing power for a house than a car, and local pay and unemployment rates have more of an effect since you can't just pick it up & move it. I mean, look at even Irvine Renters forecasts - he has to say here is the curve assuming interest rate X and rental value Y and median income Z stay put - and we all know X Y and Zkeep on squirreling around quite a bit. It's harder to forecast with accuracy.
Also with cars, the time useage frame is shorter (ex. I'm buying this to use for 5 years say, then it's out, and any loan/lease time frame is equally as short). It's not like buying/taking a loan something that costs 20 times as much for a 30 year period. It doesn't make me as nervous, because it's less risky, and less damaging if I get it wrong.
If you were selling luxury cars, and some self-confident dude making $6/hr came by and told you your luxury car was only worth $3000 to him, not $40,000 that wouldn't be exactly helpful would it? Just annoying.</blockquote>
Strawman. Cars don't lend themselves to fundamentals based valuation like homes.
We are talking about engaging realtors and owners in a discussion of pricing models. I believe that most realtors, lacking training in economics and/or finance, lack the background to evaluate real estate pricing beyond the comparables method. I imagine the average seller is worse. As the very least some understanding of the various potential determinants of price (NOI, rent equivalent, income to price, financing terms, etc) may lead to a faster pace of normalization for pricing.
Put it this way. If every person selling a home (agent or owner) knew the information contained on the this board, where do you think prices would be? Do you think that by not-knowing is the ultimate destination for prices altered?
I think if every seller today realized that his/her property would be worth 10-30% less by next year, based on fundamental pricing metrics, they would be far more likely to reduce their price now.</blockquote>
Actually I'd argue that cars are more likely to be easy for fundamentals based valuation than homes are. The reason being that if car sales are slow - you can just ship it to another state, or even another country. It's a truer free market. Whereas, if you have a gorgeous mansion but it's in Detroit ... can't ship it.</blockquote>
Homes can be rented out readily, offering a discounted cash flow based measurement of valuation. I don't many individuals who have a buy-to-let strategy with autos. In terms of mobility with cars, you are talking about liquidity, the demoninator in a standard DCF model. However, rental cash flow, the numerator is still non-existent for cars.
Additionally, for cars, there are frictions that limit the flow of vehicles based on demand thereby decreasing liquidity. There are varying emissions laws that necessitate alterations, transportation costs, import/export if moving overseas, and the cost of carry on any vehicle.
I really would like to hear what fundamentals you apply to auto valuations...</blockquote>
I don't have the analysis, but I feel a lot better trying to figure out the value of a car than a house. For a car, there are thousands and thousands of identical models out there to compare it to. You can look them up on eBay or just search the internet and find the identical ones for sale all across the US. If your local dealer has a stupid price, you can just buy from a different dealer, or ask another dealer to find one in another state and ship it to you, or get put in an order at the factory and wait for it. If you are a Canadian and the US cars are a better deal, you can cross the border and bring it back. Vice versa for US buyers (ex. several years ago, US exotic car dealers would cross to Canada, buy a car with say 10,000 mi on it to make it "used", import it to the US, swap out the odometer, and sell it). Plus you can even go to message boards or consumer reports or whatever and figure out what the maintenance issues are going to be. Re: buy to let - I guess there are no car leases or rental car agencies in your model.
Houses on the other hand all seem somewhat unique (ex. different lots, lot sizes, streets, locations, etc etc) - it's a lot harder to figure that out for me. Especially since current and future interest rates makes so much of a difference in affordability for purchasing power for a house than a car, and local pay and unemployment rates have more of an effect since you can't just pick it up & move it. I mean, look at even Irvine Renters forecasts - he has to say here is the curve assuming interest rate X and rental value Y and median income Z stay put - and we all know X Y and Zkeep on squirreling around quite a bit. It's harder to forecast with accuracy.
Also with cars, the time useage frame is shorter (ex. I'm buying this to use for 5 years say, then it's out, and any loan/lease time frame is equally as short). It's not like buying/taking a loan something that costs 20 times as much for a 30 year period. It doesn't make me as nervous, because it's less risky, and less damaging if I get it wrong.
