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“Be Fearful When Others are Greedy, Be Greedy When Others Are Fearful”
By michelle | October 22, 2008
This quote comes from Warren Buffet in a recent Op-Ed piece in the October 17th New York Times Post. In the article Warren discusses the stock market and the history of booms and depressions and the value to be had if you invest in the recovery. He is referring to the stock market and makes a clear statement - we should buy American and he is. I agree - we should buy American.
The same principles apply to real estate.
It is clear that short term purchase and sales can be risky - no one can truly predict the short term, so if you want to buy a home for just a year - you may want to rent instead.
However, fears regarding the long term value (5+ years) of real estate are not based upon the actual facts. The local economy has been strong and has a diverse foundation in the service industry, technology, export and so we aren’t tied to a single sector in the economy that might have toubles at any point in time. We continue to have a limited amount of land to build on and we are still significantly lower priced then other major cities.
Buying a home to live in - continues to be an investment that (a) provides you shelter and a lifestyle, (b) is a forced savings plan (assuming you stay current on your principle + interest payments), (c) provides you with tax advantages, and (d) will grow in value over the long run (rent payments will never grow in value for you - just your landlord).
Buying a property as an investment - continues to be (a) one of the few investments where appreciation is tied to the total number, not the amount you tie up in the investment, and (b) an investment that can generate passive income. Doing nothing and just sitting on cash is a terrible long-term strategy, since it is the one asset that is sure to lose value over time due to inflation.
Topics: Financial News, Real Estate Info |
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