Today, my family attended a party in an executive condominium (EC) development in Yishun. To those unfamiliar with Singapore, Yishun is a sub-urban area that is on the outskirts. It is pretty isolated by Singaporean standards. My wife got a little curious about property prices in the area. We took a look on property websites and discovered a typical 3 bedroom condominium in Yishun was selling for $1,000,000 Singapore Dollars or US$740,000. I commented that it was a rip-off but my wife countered that it was expected for an EC in Singapore to cost that much. We then had an interesting debate about how to determine the intrinsic value of a piece of property and what “reasonable prices” mean. I try to explain the flow of the discussion here. The Magic Box I like analogies to explain concepts so let’s start with a magic box. Let’s call it The Box....