How to tell if a property is overvaluedWritten by Mike McVey
In wake of incredible house price boom witnessed in most of developed world over past decade, a lot of ideas have sprung up as to how to value a house 'fairly'. The reason for this is that traditional methods, such as working out house prices as a multiple of salaries, or perhaps mortgage affordability as a percentage of income, seem to have 'stopped working' recently.There can be no doubt that house prices are .. ahem! .. at top end of their range compared to traditional valuation methods, but don't let anyone fool you that this is now 'norm', or that a 'new paradigm' is in place. Such talk rightly marks climax of an asset bubble, as witness dotcom bust as millenium rolled over. Many things can change as technology and societies develop, but basic human nature isn't one of them, and twin drivers of any asset bubble, fear and greed, are rather depressingly evident in this bubble too. So if you live in an area where houses are trading at, for example, twice historical sustainable relationship to salary, how can you tell whether this is 'ok' or 'bad'? Easy. There is one relationship that has stood test of time and wheathered all previous house price booms and busts - relationship betwen house as an asset, and return on that asset. What do we mean by this? Any asset has a 'return' - what you make for holding asset. Houses traditonally 'return' in 2 ways - by capital appreciation (house price growth) and by rent (if you own a house, you could rent it out). As it can be difficult to create a simple equation that factors in both these elements indivdually, they are usually rolled together, to give an easy way of comparing required sale price of a house against it's 'true' worth.
| | Why Lotto Wheeling Systems WorkWritten by Mandy Sheridan
You may occassionally come across websites or individuals who claim that lottery 'wheeling' doesn't work (wheeling is multiple entries using combinations of a set of numbers). The usual justification for this is that they say you are entering same number multiple times in order to create your wheel, and thus spending money needlessly. They are correct in one sense - after all, you could cover all 49 numbers in UK national lottery (the 'Lotto') in only 9 tickets (6 different numbers per ticket). On other hand, any wheel must 'combine' numbers you want in order to create possible wins on any one ticket, so, for example, you might cover only 10 or 12 numbers with same number of tickets in order to create a guaranteed '3' win. But... and it's a big but, in first situation, you have only 9 chances to win jackpot (i.e. 6 from 6 correct) and only a slim chance of any other prize too. A '3' win, for example, lowest win possible in UK Lotto is actually quite remote, clocking in at about 55 to 1 against. In other words, if you enter your 9 tickets every week, you might expect 3 numbers once every 5 weeks or so - hardly a great return on your $50 investment! And this is why wheels are so good - they allow you to cover large 'ranges' of numbers without buying all tickets you would normally need to get same sort of cover. The older less popular wheel would usually require you to buy a lot of tickets, but would guaranteee a certain outcome if you managed to 'catch' a certain number of draws in your picks. Good modern
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