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Real Estate
The Real Estate Adviser |
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November 25, 2005
The Real Estate Adviser: Investment property? Know the P/E ratio
By TOM KELLY
Special to the Journal
Special to the Journal
There are keys to finding an investment property that will at least "track the market." One tool, developed by Professor Edward Leamer at UCLA, is a creative gauge that can help you evaluate different properties for their appreciation potential.
Leamer's concept is a variation on how stocks are evaluated. When analysts look at stocks, they often focus on the price-earnings ratio as a measure of whether the stock is overvalued or undervalued. The higher the number (especially relative to either the market as a whole or to historical averages), the more likely the stock is to decline in price over time.
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Previous columns:
- The Real Estate Adviser: For fun or profit? Tips on buying second home, 11-17-2005
- The Real Estate Adviser: Curious timing for talk of home deduction cut, 11-10-2005
- The Real Estate Adviser: Local event part of Aging in Place Week, 11-03-2005
- The Real Estate Adviser: Signs of a housing slowdown? Not here, 10-27-2005
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