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
1 comment:
-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.
Post a Comment