Is there a house bubble in Edmonton?

smalltown

How to figure a home's fundamental value
6 K' U  P- `, K  k7 j5 [Leamer says he can tell because homes, just like stocks, have a price-to-earnings ratio (P/E) that he believes determines their fundamental value. The “earnings” part of the ratio consists of the annual rent the house could command. Homebuyers can compare current P/Es with historical levels, Leamer says, to get some idea of whether houses in their cities are becoming overvalued.
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8 g6 ~+ O% L# d+ UNot everyone buys the idea that P/Es dictate value. But investors who completely ignore P/Es do so at their peril, as many have learned in recent years. Leamer, who heads the prestigious Anderson Forecast at the University of California in Los Angeles, points out that the P/E for the Standard & Poor’s 500, a key stock benchmark, was nearly double its previous historical high when the stock market bubble burst in 2000. When home P/Es peaked in California, Boston, Dallas and other markets in the mid-1980s, devastating real estate recessions followed.
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Leamer didn’t invent the concept of P/Es for homes. But his willingness to proclaim bubbles in several of the nation’s hottest markets has brought him lots of attention recently.
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; N0 m& g0 b: |To calculate P/Es for entire cities, Leamer divided the median home price in each by the annual rent for a two-bedroom unit in each city -- and looked at P/Es each year since 1988. Here’s what he found:

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3 ~6 ]5 y2 ^1 D) G3 A5 f. GIn Boston, the residential real estate market’s P/E recently topped 30 -- compared with just under 20 in 1988.

+ D2 V' Z3 R1 [( b: vSan Francisco’s previous peak of 25.6 in 1989 has been eclipsed, with the P/E currently at just over 27.
3 M  D$ s" L% r7 SSan Diego’s current P/E is nearly 30, compared with a 1989 high of 23.4.
2 a: q% S/ p4 h: K3 j6 CNew York, by contrast, is actually well below previous peaks. The area’s current 22.5 P/E is above its recent nadir of 17.6 in 1993, but down from 28.6 in 1988.
; ?: g: _- \+ @% q0 ?  DYou don’t have to know exact P/Es, however, to spot signs of trouble, Leamer says. Any time there’s a disconnect between prices and the underlying value of homes, as measured by their market rents, there’s the potential for a bubble.
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9 v0 U# ~, }2 D$ A" F9 W1 Q9 xIf home prices are rising much faster than rents, as is true in Los Angeles, that’s a strong indication a bubble is forming.

& F* ?& W" E* U: R9 l$ L# e8 ?If home prices are rising while average rents are falling -- which is the situation in San Francisco -- the bubble is pretty much unmistakable.
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  o! Y% p% L) q% T Home P/E ratios for 9 metro areas
: X9 p) F- X' u3 U9 F( A Avg. 1988-2000 2001
3 b) c9 T' n2 W1 i% h; S  K( [Boston  20.5 30.2
San Diego  22.8 29.7
San Francisco  23.8 27.2
/ M' a$ ~. U! ]0 OLos Angeles  21.3 25.6
Seattle  20.4 25
# j6 X" c, U, @1 WDenver  17.7 23.7
New York  21.2 22.5
1 x; r' q; ^+ M4 R3 SChicago  17.2 20.8
Washington, D.C.  17.1 20.4


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6 J2 \( G* N' l" Q! ]. n6 m2 R, CIt's difficult to compare P/Es from one city with those from another. P/Es in Atlantic City, N.J., have wavered between 17.3 and 11.6 since 1988; in San Diego, P/Es have not dropped below 20. But you can look on the P/E as a measure of risk -- that is, the higher the P/E is above its average level, the greater the risk, no matter where you live.


, b4 p4 g1 h! ~2 tFrom: http://moneycentral.msn.com/cont ... ingguide/P37631.asp

CANDYMAN

Who has the P/E for Edmonton for the last 20 years, please post it here.
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( Z: a2 v3 r' ~" }* o; Bit would be a good reference.

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醉酒当歌

20% buble at least. And it can take 3-5 years to digest the bubble if not burst.
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[ 本帖最后由 醉酒当歌 于 2007-1-14 16:41 编辑 ]