4 ms·

I would honestly bet it'll be good for the economy overall (a reset to healthy prices) not a ripple effect to cause an overall american crash

• dantheman 3y ago
  Correct, it's not the bust that's the problem - it's the boom. The buildings were never really worth that much.
  • colinmorelli 3y ago
    There’s no “truth” to what a property is worth. It’s worth what the market will pay for it. But regardless of that, whether the values were inflated because of a market flush with cash or not, it doesn’t change the fact that crashes can and do have ripple effects.
    • sremani 3y ago
      Commercial Real Estate is valued based on Cashflow/Income (correct me if I am wrong). San Francisco should look at examples like One AT&T in STL, which was once worth 400 million that got sold for 4 million or so a year ago. https://en.wikipedia.org/wiki/909_Chestnut_Street https://en.wikipedia.org/wiki/909_Chestnut_Street
      • seanp2k2 3y ago
        4 million?!? That’s like the price of a normal old Victorian in SF if you’re lucky, and the people pooing on your front porch come free with that.
        • xnx 3y ago
          I'm guessing it must've included a lot of back taxes too?
    • SantalBlush 3y ago
      If you purchase an investment asset at a certain price with the expectation of earning a specific future cash flow on it, and your cash-flow target misses, you can absolutely say in retrospect that your investment wasn't worth what you paid for it. If you buy an ice cream cone, and it turns out to taste bad, you can say the ice cream cone wasn't worth what you paid for it. People miscalculate a product's worth all the time. The "It’s worth what the market will pay for it" mantra is quasi-economic nonsense. It isn't true.
      • colinmorelli 3y ago
        Yes, hindsight changes perception of past decisions. But there is no "end" to the economy. It ebbs and flows. Maybe today this is "worth" 75% less, but what if next year at this time it's "worth" 25% more? Now suddenly it was "worth" even more than you originally paid for it. This it the problem with how you're defining worth: it's going to change depending on when you, in the future, decide to ultimately sell it. But that's not a particularly useful definition of worth. Worth measures a moment in time. We can only price something based on what we know about it today and what we predict about it in the future, and we're not perfect predictors of the future. I think about "worth" using the only definition of worth that is particularly helpful (to me): the amount you could get for the asset if you were to sell it now. Part of that decision almost certainly a prediction of what you believe an asset will be worth in whatever time horizon you plan to sell it. You may be right or wrong about that prediction. But it doesn't change that in the moment at which your purchased the asset, it was "worth" that to you/the market. The reality is that many, many people were under the perception that the value of these assets would continue to appreciate as they were all collectively willing to pay what we now believe to be high prices for them. In hindsight, we may all have been wrong. But in that moment, I could absolutely have sold the asset for the price I paid to purchase it. So it certainly was "worth" that when the transaction happened.
        • thunky 3y ago
          > So it certainly was "worth" that when the transaction happened. Right, but it's also fair to say that in retrospect that the "worth" at the time of the transaction was incorrect since it was based on an estimated prediction of the future (as you said), which ended up being wrong.
    • cannabis_sam 3y ago
      In the same way, any ripple effects are just the natural consequence of a market economy. We chose this, and we’re getting exactly what we ordered.
    • diogenescynic 3y ago
      >There’s no “truth” to what a property is worth. It’s worth what the market will pay for it. There are historical charts and indexes that compare the price of square foot to inflation, wages, etc. There may be no one single universal truth, but there is a baseline for what real estate should cost (relative to everything else).
• idopmstuff 3y ago
  My only hope is that because leases aren't all going to come due at once, there won't be a total collapse because everyone's simultaneously selling at fire-sale prices.