So stocks are scarring the average person, because of all the volatility we’ve seen (40% fluctuations a year, anyone?). Bonds are terrible too, as they pay next to nothing.
So the obvious question is, should you invest in real estate? The two choices you have are: American real estate, and an international investment property.
My thoughts on American real estate.
Obama, through previous mortgage incentive programs, has made sure that all those who wanted to buy a house buy it last year. So basically, he collected all the housing demand we would have for a few years, and put that demand all into the time frame of one year (when the mortgage incentive program was still available). So what happens now? Where’s all the housing demand supposed to come from? The sky?
Now with all this talk about a double dip recession, what would happen to American real estate if the economy did indeed slip back into a recession (not that we got out of one, in the first place)? Owning a house is completely discretionary spending. One can put off having kids, move in with family or a friend, etc.
Also, I’m a firm believer in cycles. Real estate cycles tend to last pretty long (13-20 years). This housing bubble that just burst back in 2006? Could take a while before the secular bear market for American real estate is over.
Foreign real estate.
Obviously, one would ideally want to buy bmv property (below-market-value-property). However, the value of real estate in the first place is hard to judge. Back in late 2008-early 2009, the real value of many homes in America was $0, because no one wanted to buy them. So how do you judge an the value of real estate in a foreign nation? Truth is, you really can’t. Real estate is a highly localized investment, and unless you live in the area, you wouldn’t really understand how much the land should be valued at. That is why, as a real estate investor, you have two choices.