Monday, April 7, 2008

The Housing Market Roller Coaster

I came across an interesting video on YouTube that takes literally the phrase, “The housing market is like a roller coaster.” Feel free to take the ride:

I believe the ride stops at the end of 2006, and we all know what happened then. The video illustrates well that the housing market does not increase 3 to 7 percent every year like some real estate agents might lead you to believe. It goes up, then it goes down, then it goes flat but overall it trends up. This is basic information that most investors already know, though it is easy to get caught up in the panic of a crashing market. Remember smart investors make their money when they buy the property, so the ups and downs have little effect on them.

Be smart: Make sure the numbers make sense before you buy. In rough markets such as this, add in extra cushion to your numbers and don’t rush into decisions. Investors who are adverse to risk, or just scared to death of the current real estate market, should focus their efforts on cash flow properties. With cash flow property investors have the security of knowing that no matter how bad the market gets, at least they don’t have to worry about how they are going to pay the mortgage. After all people will also need to live somewhere, and if they aren’t buying then they are renting. Cash flow properties aren’t as sexy as some other real estate investments, but over the long haul they generally provide a great return with minimal risk.

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