4 ms·

They are not. Rent prices and home prices are not equivalent. Am I in some twilight zone episode here?

• paulddraper 4y ago
  They are equivalent. If an asset's income increases, the value of the asset increases. Purchasing is less liquid than renting, so it tends to lag. And some characteristics are more amenable to renting vs other use. But overall their trends are equivalent .
  • adam_arthur 4y ago
    You’re completely wrong. Asset values are not just a function of cash flow but also discount rates, growth in cash flow, and valuation multiples. Real estate cap rates have been compressing for decades, for example (same cash flow equals higher value, all else equal) Please don’t spread misinformation in these threads
    • paulddraper 4y ago
      Valuation multiples is a symptom, not a cause. Discount rates have largely to do with inflation, and comes out in the wash of asset valuation changes. > Asset values are not just a function of cash flow but also growth in cash flow :/ --- Price to rent ratio: https://tradingeconomics.com/united-states/price-to-rent-ratio https://tradingeconomics.com/united-states/price-to-rent-rat... Though really, that's just a graph of inflation.