[flickr size="small" float="left"]http://www.flickr.com/photos/42659427@N02/3951434578[/flickr]While the economy is unquestionably down from where it was two plus years ago when the real estate market was ablaze, those prices that homes were selling at is like a glimpse into the future. Will the prices never get back to those numbers? Come on, never is an awfully long time. During every generation there have been concerns that housing has it it's peak, and couldn't possibly continue to rise. In fact, I have a book that lists about twenty quotes from so called financial "experts" dating from 1947 to 2005, all of which state something to the effect of real estate is no longer a good investment and prices couldn't possibly go any higher. One for example is from Harvard Economist Gregory Mankiw in the Journal of Regional Economics in the Fall of 1989; "The baby boomers are all housed now. They are being followed by the baby bust. By 2005, real housing prices will sit 40 percent below where they are today." Think about that for a second, while this guy was predicting housing will go down 40%, it actually rose over 44%! Imagine the individuals that were thinking to themselves in 1989 that this can't be right and bought a house. They made money, real money. There were wealthy investors scooping up properties, knowing full well that essentially the market was on sale, and the economy will stabilize, and prices will rise again.
We are at that point again, I believe. One can scoop up amazing values currently, coupled with historically low interest rates, makes this one of the most attractive times to buy in modern times. There are all cash buyer's gobbling up properties right now, and it may be wise to follow their lead, and get a stake in the game at whatever level you can. I have recently heard about an investment group pooling resources to buy all the architectural homes near the beach they can that were worth $2.3M two years ago and are now being sold at $1.8M. They are planning on holding for 5 years, renting them out in the interim, and then selling at a profit. The simple fact is that there is no more Earth being built, and currently real estate is on sale--take advantage!