Well, you have to know how to value an asset.
Could a reasonable person have told that the Japanese real estate market was overpriced in 1990? I would say yes.
Now look at the US. How do housing prices compare to rental values? How do housing prices compare to the cost of materials and labor need to build them? In many parts of the country, they are reasonable by these measures.
Now in Boston, or New York, or California, they may be a bit high. But even in these places, I wouldn't wait around for a 50% drop. Our economy is too strong, and the earning power of potential buyers too high, for this to happen.
Of course, I could be wrong, or things could change.
And the next direction for interest rates is down.
Of course, I could be wrong, or things could change.
And that's the difference between us and the doom and gloomers who have been predicting a real estate bloodbath six or seven times a day, every day for the past few years.
Back in 1990 I was seriously infatuated with Japan and all things Japanese. I was studying Japanese at school, living with a Japanese girlfriend and spent my summers working in Japan, but I remember having serious doubts about the Japanese economy even then. The value of the Nikkei was at the time more than the combined value of all the other stock markets in the world and regardless of how well run and efficient Japanese companies were, they simply weren't worth more than all the rest of the worlds companies combined, in fact they weren't even close. That was just obvious on the face of it, even to someone like me.
Japan is facing a demographic time bomb because of their low birth rate. Since there are no immigrants, there are far fewer buyers to buy houses as time goes by. The opposite is true in the U.S., where uncontrolled immigration and a replacement birth rate is behind the strong demand for housing.