I’ve recently read the Value of Nothing. I picked up a copy when I was visiting Cambridge university in Boston earlier this year.
It’s not a book with massive hype, however a fascinating read.
Its core message is that as a society we are terrible at realising the true value of something. We also have our priorities out of whack: such as some might baulk at seeing the cost of water rise but happily fork out $5000 for a Louis Vuitton handbag, etc .
One of the clearest messages from the book is that ‘The Market’ has many flaws. We noticed this heavily in 2008.
I think we see this on a local level in Real Estate. Certain types of Real Estate that obtain ‘market based results’ are in my opinion ‘overpriced’.
They aren’t over priced if you look at the most recent sales evidence. They are over priced in my opinion because of what’s not easily picked up. They are overpriced for the mere fact that many better options exist at the same price point.
This can be quality of construction issue or it can be the fact that I feel that the estimated capital growth projections might be weak.
Many have a habit of only comparing the features such as amount of bedrooms, style of housing – such as is this a single front etc in guessing price points.
From the outside, many places appear the same. The market may value them the same. However, in reality they may be totally different.
Back to the book. If you interested in how free markets operate, I’d recommend reading it.