House Valuation Quotes

People are apt to take you at your own valuation . . . I mean if you lie down on the floor and look like a doormat people can't be blamed for wiping their boots on you.

The case for bitcoin as a cash item on a balance sheet is very compelling for anyone with a time horizon extending beyond four years. Whether or not fiat authorities like it, bitcoin is now in free-market competition with many other assets for the world’s cash balances. It is a competition bitcoin will win or lose in the market, not by the edicts of economists, politicians, or bureaucrats. If it continues to capture a growing share of the world’s cash balances, it continues to succeed. As it stands, bitcoin’s role as cash has a very large total addressable market. The world has around $90 trillion of broad fiat money supply, $90 trillion of sovereign bonds, $40 trillion of corporate bonds, and $10 trillion of gold. Bitcoin could replace all of these assets on balance sheets, which would be a total addressable market cap of $230 trillion. At the time of writing, bitcoin’s market capitalization is around $700 billion, or around 0.3% of its total addressable market. Bitcoin could also take a share of the market capitalization of other semihard assets which people have resorted to using as a form of saving for the future. These include stocks, which are valued at around $90 trillion; global real estate, valued at $280 trillion; and the art market, valued at several trillion dollars. Investors will continue to demand stocks, houses, and works of art, but the current valuations of these assets are likely highly inflated by the need of their holders to use them as stores of value on top of their value as capital or consumer goods. In other words, the flight from inflationary fiat has distorted the U.S. dollar valuations of these assets beyond any sane level. As more and more investors in search of a store of value discover bitcoin’s superior intertemporal salability, it will continue to acquire an increasing share of global cash balances.

The top employees of the five largest investment banks divided a bonus pool of over $36 billion in 2007. Leaders in the financial sector argued that in fact their high returns were the result of innovation and genuine value-added products, and they tended to grossly understate the latent risks their firms were taking. (Keep in mind that an integral part of our working definition of the this-time-is-different syndrome is that “the old rules of valuation no longer apply.”) In their eyes, financial innovation was a key platform that allowed the United States to effectively borrow much larger quantities of money from abroad than might otherwise have been possible. For example, innovations such as securitization allowed U.S. consumers to turn their previously illiquid housing assets into ATM machines, which represented a reduction in precautionary saving.13

In relative valuation, you price an asset based on how similar assets are priced in the market. A prospective house buyer decides how much to pay for a house by looking at the prices paid for similar houses in the neighborhood. In the same vein, a potential investor in Twitter's IPO (initial public offering) in 2013 could have estimated its value by looking at the market pricing of other social media companies. The three essential steps in relative valuation are: Find comparable assets that are priced by the market; Scale the market prices to a common variable to generate standardized prices that are comparable across assets; and Adjust for differences across assets when comparing their standardized values. A newer house with more updated amenities should be priced higher than a similar-sized older house that needs renovation, and a higher growth company should trade at a higher price than a lower growth company in the same sector. Pricing can be done with less information and much more quickly than intrinsic valuations, and it is more likely to reflect the market mood of the moment. Not surprisingly, most of what passes for valuation in investment banking and portfolio management is really pricing.

Ultimately, there are dozens of valuation models but only two valuation approaches: intrinsic and relative. In intrinsic valuation, we begin with a simple proposition: the intrinsic value of an asset is determined by the cash flows you expect that asset to generate over its life and how uncertain you feel about these cash flows. Assets with high and stable cash flows should be worth more than assets with low and volatile cash flows. You should pay more for a property that has long-term renters paying a high rent than for a more speculative property with not only lower rental income but more variable vacancy rates from period to period. While the focus in principle should be on intrinsic valuation, most assets are valued on a relative basis. In relative valuation, assets are valued by looking at how the market prices similar assets. Thus, when determining what to pay for a house, you would look at what similar houses in the neighbourhood sold for. With a stock, that means comparing its pricing to similar stocks, usually in its “peer group.

So that’s where to look for the bursts in the next real estate crash. It’ll come from those cities where foreign buyers and wealthy speculators have driven prices to the extremes, specifically Hong Kong, London, Singapore, Manhattan (as opposed to broader New York), Vancouver, San Francisco, and Sydney. On the flip side, the most affordable large cities in the United States are Atlanta, with valuations at 3.1 times income, Dallas at 3.7, Chicago at 3.8, and Tampa and Phoenix, both at 4.1. These are cities where everyday people can still (barely) afford houses.

a syllabus is established over time. . . . it represents cultural, social, pedagogic choices which aim at more or less stable consensus. . . . the syllabus is instinct not only with aesthetic but also with political and political-economic motives and valuations. There is a politics in the marketing of the 'classical' as there is a counter-politics in the bartering of the subversive and the anarchic. A canon, on the contrary, is a profoundly personal construct. . . . A canon is the guarded catalogue of that in speech, music and art which houses inside us, which is irrevocably familiar to our homecomings.

Kirkus Reviews: Cretikos presents a brief but thorough introduction to properly calculating an insurance value for one’s property. The author argues that there are fundamental flaws in the property insurance system, particularly in Australia, the principalcountry in his analysis. At the heart of the issue, he asserts, is Building Sum Insured Value (BSI), which is the monetary amount that the holder of an insurance policy receives in case of total loss. However, the formulas for calculating this amount are fatally flawed, Cretikos says, as they rely upon a calculation of replacement value—the value of the property immediately prior to the event that destroys it—and doesn’t factor in necessary supplementary costs, including temporary housing. Moreover, the standard formula neglects inflation over the policy period, and especially increased building costs. There’s currently “no legal definition of destruction, catastrophe, total loss, and constructive total loss,” nor a standardized interpretation of the competencies required to be a Building Insurance Valuation Specialist Valuer Practitioner. With impressive rigor, the author explains not only the technical challenges posed by the current understanding of BSI, but also preventative measures and techniques one can adopt to avoid being disastrously uninsured; for example, there’s a meticulous discussion of making a claim for the value of the contents of a property. Also, Cretikos carefully reviews inadequacies in the legal system that encourage too-low BSI valuations and suggests ameliorating legislation (although these discussions are mostly specific to New South Wales, Australia). He makes a strong case that the insurance industry is plagued by a “denial culture” in which companies aggressively attempt to avoid paying justified benefits, even if he does so in sometimes awkward prose: “Insurance providers employ deliberately crafted legal jargon to avoid making complete schedule-related payments that are rightfully owed, even if this results in the policyholder being compelled to bear out-of-pocket expenses that should be covered by Additional Benefits or other supplementary expenses.” Still, this brief instructional guide offers a wealth of practical knowledge. An expert tour of some fundamental building-insurance issues.