some of you, esp. Cubano and Kin, remind me of guys I used to trade with in the pit. Whenever they were holding positions overnight, they would come in the next morning telling everyone their rationalizations for being long or short. Sure sign of a losing position.
When did I ever suggest that anyone sell their principle residence? The tax benefits, combined with a forced savings plan, make it essential that you should own your own house. It is probably the only way that most will amass any wealth. My comments have been addressed to the RE investors on this board who are aggressively trading the MOMO in the RE market. These investors will undoubtly end up liquidating positions in an illiquid market. As for the investor that is up 40% on vacant lots, take some money off the table. TO advise him otherwise is simply foolish IMO. The only exception to this would be: these particular holdings were such a very small component of his overall portfolio of holdings and net worth. Asset allocation is the key to growing wealth long term and being able to weather the inevitable ups and downs.
This is what you wrote:What if you get a 50% correction. Many veterans of real estate have told me that this can be expected. Especially in hot areas. I only had the intention to say that a 50% correction is possible, but not in the market where the average american buys.
Only I do not rely on appreciation for my income and real estate has been highly profitable. I strictly look at cash flows which could be generated from renting a property. Figure in tax savings from morgage interest, depreciation, home improvements, and other bullshit, and RE looks very attractive. Add in appreciation and it is very attractive. Have negative appreciation and at least it improves your cash flow ue to property tax savings.
Case study: Bought a house in 1990 in the top of the last real estate bubble. Then came the recession and real estate collapse. The house didn't lose value during this time. Only, it gave around a 0.1% return a year for 10 years that's all. Then came the present bubble, it almost doubled in less than 5 years. I expect the same thing will happen now. Overall, 100% return in 14 years, peak-to-peak of 2 bubbles, so it's a good indicator of a long term investment. It's not that good i know, but since your capital should never depreciate if you're located well and take care of your house, i'd say it's not bad either for a safe investment. Of course the best way to make money is to spot the begining of a bubble and buy then, to sell 5 years later. Long term, real estate value rise with population, economic growth and inflation.
Every asset class has its own cycle, so one cannot say that real estate will correct only by 20% while tech sector corrects by 78%. When trading or investing do not develop opinions, market is your phrophet, play as the price says not what the predictions opine.