[JasonC]

The good alternative is well known, it is the discounted present value of the future cash flows the asset will generate. If you know those likely future cash flows and can put a reasonable interest rate on it, one that reflects your own time preference for savings and takes into account alternate investments available in the market, then the fair price is just that DPV. If the cash flows will continue indefinitely without change, that means you just divide by the interest rate. E.g. 10 times rent means a 10% rate of discount if you will get that amount forever. If it will rise a few percent a year, that is effectively added to the return.

Market prices are *not* an adequate guide to the value of things. This is particularly true when interest rates are far from the level you expect to see over the lifetime of the asset. One of the problems in bubbles is you see people capitalizing at 4% interest rates, properties that will have to produce income for 25 or 30 years, when the actual interest rate on alternate investments will *not* stay that low for such an extended period.

Fair question.

[expat_panama]

The good alternative is well known, it is the discounted present value of the future cash flows

OK, you know it and I know it, but just try saying this to the IRS, the SEC, or the FDIC.  

The SEC requires asset values be announced at the latest 'market' price AKA completed transaction price.  The FDIC might be willing to take something like some county assessed value but market prices carry a lot of weight there.  Finally, the IRS only cares about the purchase and final sales prices.

Our opinion really doesn't matter much here...