Has the housing market dropped enough to consider real estate investing again?

The question:

“Has the housing market dropped enough to consider real estate investing again?”

My answer:

Well, we have seen about a 12 percent drop in home values in the last year (currently 4/08) and everyone is “calling” the bottom of the slide should you believe the industry pundits.

I don’t.

We still have a another 12% at minimum, to correct back to the norm. With that said, real estate investing has always been about finding properties at substantial discount at the time of purchase. So if one can identify a properties and purchase them at say a 20% discount from today’s value, it’s hard to see how that could be a bad investment over the long run.

Remember, you sell when everybody “loves” the investment and you buy when everybody “hates” the investment. Housing currently falls the “hate” category…so you know what that means!

Thanks for the question!

UPDATE Sept 2009: The market has dropped even further and now there is talk about a housing recovery which has already started in $50,000 to $150,000 price range. I recently saw a news story showing multiple offers on homes in this price range actually driving up prices.

Price stability always starts in the lower price range and moves up the scale. So this is good news for the future of real estate values.

Author: The Mortgage Insider

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