Is This a Good Time to Invest in Real Estate?

Over the last few years – actually, more than that – we’ve seen a lot of people lose a ton of money in their homes.  Prices in many partsHome_Investing of the country cratered, and it seems like stories of declining prices were prevalent in most places.

Here in the Chicago area, I’ve seen prices drop measurably over the last 5 or 6 years.  There were places that saw homes go off the market very quickly, and have multiple bidders, turn very quiet. As if they were parts of ghost towns, nearly devoid of buyers, with tumbleweeds blowing by.  Interesting, because this is an area that has a large corporate and business base, and is quite diversified overall as the center of commerce between the coasts.  If it could be like this here, what could things be like elsewhere?

We’ve heard all kinds of stories about houses that could be bought for a massive discount from prices of not too long ago.  Places like Miami, Phoenix, and Las Vegas come to mind.  Detroit might be the poster child, as there are plenty of homes there that could be purchased on a credit card!  Go check real estate listing for that city, on a major site.  You’ll find plenty of homes under $1,000.   Of course, there’s often a very, very god reason that homes are priced so low.

Anyway, I’ve noticed over here that after some years of falling prices, there appears to be some stability.  This isn’t based on a scientific, professional assessment of tons of data, but rather from just a person checking websites here and there and looking at prices within a few different suburban areas.  Where there had been steady price declines, there now appears to be a leveling off.  In fact, I’ve seen some areas with prices that are surprisingly healthy, given the previous declines.

With interest rates still very low, and prices leveling off, I wonder if the window to purchase true bargain real estate is closing.  Is this a good time to buy real estate?

While my interest is primarily for living purposes at this time, there are others who might see this an opportunie time to invest.  If one could take out a super low interest loan, and rent out while ensuring the vacancy rate is kept low, a really solid rate of return might be had in this present environment.  Additionally, there is the possibility of future asset value increases as well.  Sort of like getting dividends and seeing capital appreciation on a stock. 

Real estate can be a component to one’s long-term investment plan.  Many people have done very well, and have been able to grow net worth this way.  There are plenty of personal finance bloggers that invest in real estate, and operate as landlords!

What Do You Think?

Do you see prices stabilizing where you live?

Do you think the window of opportunity to get a low-priced home is closing, or do you see prices continuing to drop?

Have you considered investing in real estate as a landlord?

Comments

  1. says

    We plan on buying our next house next year, and this is something that we’re wondering about. I only think home prices in my area can go up, same with interest rates.

  2. says

    Where we live–Canada’s west coast–prices are declining. Some say a bubble here is beginning to deflate, like the USA has done. Time will tell. We’d definitely be interested in investing in some rental property, but the time doesn’t seem right, given declining prices. We’ll be patient.

    In the States, I’d tend to think the time is right for buying, though I know real estate market conditions vary dramatically in different regions and cities. Still, seems like the worst is over with respect to housing. But if I were investing in real estate in the US, I’d sure look for a super bargain and not buy unless I were financially and psychologically prepared for a decline in the value of my property.

    • Squirrelers says

      Kurt – I agree with your hypothetical approach, in your scenario if you were here in US. In Canada, my observation visiting Toronto a few years ago resulted in me being surprised at how expensive housing was there, and how much it had apparently gone up. Just seemed like a bubble was forming, and some people in the metro area there would be blindsided when it burst. In Vancouver, it seems like prices have gone through the roof. It seems like housing would be such as massive percentage of expenses for new homebuyers that it would be tough to manage.

  3. says

    Since real estate is always local, I qualify my statements to mostly refer to the Los Angeles area. I think it is also true elsewhere, but I know it is true in LA. I felt housing was a good investment for the last year or so. Prices were low and interests were lowest in years..

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