It depends on what your goals are. If you are going to purchase a property, you would use the price you'll pay for it. If you are thinking about selling, it's the market value minus whatever transaction costs/taxes you'll incur.
I mean, if I buy a $100k house (for cash, to make it simple) that rents for $2k/mo, awesome. If that house is now worth $1m, though, and the rent is still $2k, not so awesome. I'd probably want to sell it and invest the equity in something else. It's possible, of course, that there are no other good investments available to me, or I expect it to appreciate even more, or that for some reason it will cost me a fortune to sell the place, or whatever, so all that has to be taken into account as well.
-W