Unless we see your lease or know the length of lease, everything is speculation.

Banking purely on appreciation feels too much like speculating to me, but if I can realize 30%+ NWROI via a house hack with an expected appreciation of 0%, then that starts to look a lot more compelling, especially when I do have the expectation that the property will appreciate (and as long as you're willing to deal with the intangible negatives, like reduced flexibility, property management, dealing with tenants, etc.).Having said all that, I presently have a property under contract in Morristown which is rented for 1% of the purchase price and cash flows well, but that's because one of the units is a 5BR which is rented by the room - a very unusual, risky, and potentially high-maintenance situation.

Lots of factors play in here: stocks could tank, real estate could soar, but those are all speculation.  

I guess illogic is a harsh word, but I do think there is more of a speculative play involved with betting on appreciation - akin to betting on a hot new tech stock.

SoCal has looked "expensive" and everyone investing here has been called a speculator for the last 40 years, but we generally get the last laugh if we hold for the long term.

We had 3% population growth all through the recession, but that new housing pace was just too strong to maintain.I know it was even worse in some markets where investors were buying condos on speculation, hoping to flip them or rent them.

Some of these new entrants, especially the out of state guys (*cough - California) that are investing here via funds are likely to get caught with their pants down and there will be a sell-off soon in the starting towards the end of next year.Is there a way to speculate on this with market instruments? 

You pay a couple of points more but in return the bank is willing to accept a more speculative project that won't be completed for a year and won't be fully leased for 2.You mentioned that the building is historic.

For me, that is when there is a lot of speculation in the RE market without underlying value and healthy market conditions.

I've seen properties that are completely vacant and uninhabitable as-is sale for $100k+, the speculation is just driving everything up.