9/13/2005

Stocks or Real Estate?

Most people today when asked where they would rather invest their money answer real estate. This seems to be the better investment if your looking at the short term. But, let's face it, real estate is a long-term investment. Everyone knows that the real estate market is 'booming' right now, people who have the means see this as an opportunity to buy and make some money. When in actuality it's a better time to sell. Most booms in any market end in a bust (major price declines). Who wants to be stuck with a high loan balance while the value of their home is going down faster than they could catch up? You'll end up selling because of fear of bankruptcy and have alot of out of pocket payouts. On the upside, this boom may result in a period of stagnation and the family income could catch up with prices causing the market to slide back into equilibrium. Comparing real estate with the stock market over a long term period you'll see that, for example, the S&P 500 has actually stomped the real estate market. A quote from frobes.com in a recent article said, "From the start of 1980 to the end of 2004, home sale prices increased 247%. A pretty sweet deal, it would seem. Over the same period, however, the S&P 500 shot up more than 1,000%." So should we be discussing our investment opportunities with our real estate broker or our stock broker? You tell me........
http://moneycentral.msn.com/content/P123683.asp

8 comments:

Anonymous said...

Pound rises against dollar, euro on back of inflation data
AFP/File Photo: A man stands outside a exchange house at Leicester Square in London.
I recycle my old stuff here CD maybe you should too

destiny said...

Real estate is an extremely sound investment. Why would the price of a house or land decrease in value? It doesn't seem to ever decrease; if it does, it's only for a very short period. Selling now, while prices are skyrocketing would not be a very wise decision. Just listen to what you just said, "its a better time to sell."
Why?
Because you might be scared that it will drop in value? That's not smart investing advice in itself. If prices are rising and have been continuously rising for quite some time, the last thing I would suggest doing is sell.

Mia said...

The real estate market is very solid in this area. To think it may go bad, much like the real estate market in the Detroit area, is improbable in Southern Utah. It is rising and will continue to rise. There are just to many positives in this favor.

taylor said...

The real estate market is an extremely good investment in Southern Utah. The market here in Cedar City will just keep rising fo several years. However, I don't think that it is wise to invest in the real estate market in California. The prices there are so extremely ridiculous the market will, at some point, slow down or even decrease substantially. I think that it depends on where exactly you are planning to invest in the real estate market.

Dr. Tufte said...

-3 on Bree's post for spelling errors, a poorly formatted link, and a sentence fragment.

-1 on Mia's comment for a spelling error.

Bree's post is sensible (if a bit too much like a sales pitch). I agree that it is smart to sell now - which locks in profits. The difficulty with doing that with real estate is that most people have to buy again in the same expensive market.

Destiny, I think, is mistaking nominal price increases for real ones. Many people lose money in real terms on real estate investments.

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