• hperrin@lemmy.world
    link
    fedilink
    English
    arrow-up
    1
    ·
    edit-2
    1 month ago

    The consensus of the market. Prospective buyers. People can still buy things that are overvalued, but when the market is exerting pressure on you to lower its price, you know it’s overvalued.

    • Flying Squid@lemmy.worldOP
      link
      fedilink
      English
      arrow-up
      4
      ·
      1 month ago

      The market? Weird, because I’ve seen a lot of complaints that things like houses are priced too high to be affordable. And yet by your metric, their value is the correct one because the market has decided so. Is that really what you think?

      • hperrin@lemmy.world
        link
        fedilink
        English
        arrow-up
        1
        ·
        1 month ago

        That may be a case of something being overvalued. That can especially happen when there is artificially limited supply.

          • hperrin@lemmy.world
            link
            fedilink
            English
            arrow-up
            1
            ·
            edit-2
            1 month ago

            If you are trying to sell something in the market, and you are not getting any interest, you have probably overvalued the item. You might be able to sell it at that price if you wait long enough, but not because that item has that value generally. In that case, you’ve probably overvalued that item, and would be able to sell it if you reached the value others perceive it to have.

            If I sell a cup of water to a man dying of thirst for $100, I shouldn’t expect that my next cup of water will sell for $100 on the market. The cup of water doesn’t have $100 worth of value, it just fulfilled someone’s needs or desires at the time enough that they were willing to pay more than its value to get it.

            • Flying Squid@lemmy.worldOP
              link
              fedilink
              English
              arrow-up
              2
              ·
              1 month ago

              Again, the market has priced houses at the level they are now. You claim they are overvalued. You have not explained how that is determined. We’re not talking about one house like your one cup of water, we’re talking about most houses.

              So, again, if the market sets the value, who determines those houses are overvalued?

              • hperrin@lemmy.world
                link
                fedilink
                English
                arrow-up
                1
                ·
                edit-2
                1 month ago

                I didn’t claim they are overvalued, I said that may be a case of overvaluation. Do you disagree that things can be overvalued? What do you think market corrections are in that case? It’s incredibly difficult to determine if a section of the market is overvalued before a market correction, and if I had that ability, I’d probably be rich.