Park City Real Estate-Less Volatile than S&P_500

In his NY Times article (March 26, 2011), “A Bounce Isn’t Enough to Recover from a Bubble”, Paul J. Lim writes “…though most sectors of the Standard & Poor’s 500-stock index are now trading above their levels of March 2000, the overall index is still slightly below where it was then. And technology and telecommunications stocks — the market’s best performers leading up to the 2000-02 bear market — are still down around 60 percent, on average, from their peaks 11 years ago; blue-chip growth stocks are off about 35 percent.”

I’m just reminding everyone that median home prices in Park City are equal to their 2004-05 levels.

It seems everytime I am involved in a negotiation with a “financial” or “banking” expert, that person has no confidence in the value of real estate, submits low ball offers and frequently gets cold feet. This past weekend, I watched a financial guy get outbid by less than $20,000 and lose a home that was perfect for his family.

Perhaps there is a bit of “projection” going on here, where the financial expert is projecting the volatility of the financial markets on to real estate.

At the end of the day, the numbers don’t lie. I’m not sure why it’s ok to own a stock that’s worth 40% less than it was 11 years ago, but those same individuals have a problem with investing in a home that they will either be living in or renting that is down 40% from its peak 4 years ago. What do you think?

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