That's correct, and if you buy land out in a rural area somewhere hoping to build a subdivision, or in a city like Detroit with declining population, home values etc. then you could well have a problem. Likewise, buying anywhere at the top of a bubble isn't a great idea, but the RE bubble was (or should have been) clear to pros well before it peaked. It's possible to screw this up as with anything else, but aside from investing in Treasury bond funds I think RE requires the fewest specialized skills or experience of any type of investing, and risk is generally lowest. Certainly less so than playing the stock market. FWIW I don't know a single person who's gotten rich investing in a buy n' hold stock portfolio, but I know at least two people who've made eight figures in the real estate business (mostly before the bubble and with starting capital of 100-300k), and several more who earn enough to live on solely from rental income.
"how did people get it in their heads that long housing is an investment?" From this major league asshole: Is he now the paid pitchman for Subway $5 footlongs, or something?
very true, and so the day you buy a house, one should make sure that there is spare cash to pay for at least 2-3 years of mortgage. It is the property taxes that p^ss me off, they are going through the roof, and for what, lousy schools and police who focus full time on issuing traffic tickets and screwing you even more.
In all the brilliance (LOL!) displayed on this thread, the key value of owning residential real estate has been overlooked. Net profits to 500K per couple are TAX FREE, so long as you live in the home for 2 years. Combine that with 10:1 leverage, and it is a no-brainer. Anyone who can qualify for a mortgage at this point in time - with depressed prices and low interest rates - is just crazy to be renting. My wife is a realtor here in Scottsdale, and I can tell you that qualified buyers are getting incredible deals on great property. And this is the case nationwide as well. 5 years from now you'll be very sorry that you handed over a check each month to someone else who owns your property, and got nothing in return except a roof over your head. Ask anyone who bought in 1974, 1981 or 1990. You don't get wealthy sitting on your ass and not taking advantage of opportunities like this. There is absolutely no better investment than in the home you live in, so long as you use your head when you buy.
It's just amazing how closeminded and simple some people are. It's also obvious that few in this thread are aware of maintenance costs for the landlord. Ownership costs have gone up significantly and are not dropping, as opposed to the real estate prices. The smart ones are negotiating long term leases at rock bottom prices. You shed the ownership liability but are open to the upside with a sublease. The simple minded ones just buy & finance without thinking. Arizona is going down the tubes, so maybe that's why you think there are deals. They really are not. Arizona's growth has been due to the real estate bubble. It has a bleak prospect. Everyone thinks they can play landlord & real estate speculator. Yet few ever admit that it's mostly a sucker game. If you want to find a real deal today where buying with or without financing makes sense, you do not go on the open market through a realtor. You want the low risk deal where the purchase price can withstand a bad occupancy rate with lower than average rents. Your neighborhood real estate broker is not going to even have a whiff of that.
My bet is that you were one of those in March who were saying "The stock market is going down the tubes." Well, wrong. It WENT down the tubes. Past tense. Those who bought in March did the right thing, as those who are now buying into distressed real estate are going the right thing. And ALL real estate is local. Making a blanket statement about a state is just ignorant. The smart money knows when to buy. The dumb money sits on the sidelines and watches others make profits.
He was like the "Billy Mays" of housing. LOL!!!!! I agree. Greenspan may take over where Billy left off with "Kaboom, the dual saw," etc.,
Come to MA, it will change your mind. Buyers here are recently outbidding each other. 5 years from now the rest of the supply the banks are holding will have been dumped onto the market. Not to mentioned the resetting of higher level mortgages that are also seeing increasingly high default rates. This is 2009, not '74, 81', or 90. Boomer are done buying. Also there are clear warning signs that govt could start cutting rental subsidies. So betting on cheap housing in iffy areas could also become harder. The easy money in real estate, driven by demographic booms is definitely over for now.