Perhaps boom prices do bring out an element of stupidity in investors but I'm not sure one can count on this when offering an investment for sale.

The real estate in my local area is still booming and has been for the past 2 years with no sign of receding and prices have increased more than 40% annually. Even though it has been booming and demand is far outstripping supply it amazes me that some good quality homes take a long time to sell. I couldn't understand it until my neighbour decided to put his house on the market at a price that one would expect to achieve had they been living closer to the beach.

In fact, a house which has far more street appeal and would be on a par with my neighbours sold in less that a week for A$75K less than next doors is demanding. Does he think that investors are stupid? Obviously.

I would assume that even in a boom investors are not without their faculties and able to make sensible decisions. One would have to reason that if an investor bought this house at the advertised price, it would take him at least 12 months before he was able to break even on the investment. And investors know that if a boom has been occurring for more than 2 years it probably won't continue for another two.

I think boom prices just result in stupid sellers.