If you watch the news at all, it becomes clear that no one knows which direction the market will go in the short term. On one hand you have those who have called the bottom of the market, on the other you have those saying it will crash again.
I heard an ‘expert’ the other day talking on one of the news shows about real estate being as affordable today as it was in the 1970′s. (my parents bought a nice house in the 70′s for around $20,000 in Idaho… I don’t see that yet)
Other people say that the smart people today should all be renting houses because real estate will not recover for a decade.
History has shown that in the short term real estate has experienced bubbles, it typically gains value over the long term. This will not be the case everywhere, real estate will typically gain value in markets that have demand for increased housing, and will lose value in markets that do not have demand. While housing is a necessary commodity, it is subject to the same cycles of supply and demand as other items. In markets with tight land constraints with limited land to build on, as long as there is employment to support the cost of living, prices should increase over the long term, however in areas where there is an abundance of build-able land and/or declining job markets, prices will stay flat or decline.
Bottom line here: If you are looking at real estate as an investment, make sure you look at all the factors before you buy. Don’t buy into the media hype, or take the word of someone who makes money from your transaction. If you are buying a home for yourself, understand that if you plan to move in the next 5 years, you may not have enough appreciation to make money when you sell. However if you find the right deal (and they are out there right now) you could come out ahead – if you do it right.
