What's the Real Value of Real Estate ?

Bill Bonner asks what the real value of real estate ?:

"I tell you," began a Florida real estate developer, who was visiting us in Baltimore, "the problem in real estate is going to be worse than people imagine. I'm involved in dozens of different projects. What we're seeing is a lot more speculation. Normally, we count on selling about 15% of our new units to investors. But now, we're selling 60% to 70%. As builders and developers that poses no problem...at least not for right now. But everywhere I look in the real estate area in South Florida...I see fuses, and they're lit.

"First, you have all this extra production being bought up by speculators. It's a lit fuse, and it's going to blow up because in a few months these units are going to be completed, and the speculators aren't going to move in. They are hoping to flip them, but who are they going to flip them to? It's a fuse, and I figure it's only got a couple of more months left on it.

Can speculators hold up a whole local market? With higher mortgage rates coming, we expect more challenges for speculators.