Speaking of those high-tech internet tools we use to determine value….
This is from the FHA Underwriting Manual of 1936:
307 (2.) It must be noted, too, that sales prices are of varying usefulness and importance according to the rapidity with which price levels of real property may be changing. In an unusually active sales market, such as exists in “boom” times, accompanied by rapidly rising prices, the stimulus given to prices by strongly competing buyers becomes such that fairness, as regards the prices paid, disappears.
Stability and permanence are nonexistent at such times, as well as in times of rapidly declining prices, and the prices then obtained in sales are almost worthless as useful information in estimating value, though their frequency, coupled with pyramiding prices, constitutes a warning of the imminence of a reversal of the price trend. Only in times of comparative stability of the price structure are sales prices of substantial worth in valuation work.
Read the full article discussing home valuations during booms here: