Home prices have been rising steadily since we began the long climb out of this recession. It’s actually been going on so long that some new comers to the world of real estate investing think that arrows only point up.
That was true until January.
For the first time since the beginning of last year home prices showed a decline. Even at the end of last year they were still climbing by over 13% every month. And then all of a sudden we hit a wall and began a slide. There are two questions we need to consider:
1) How far backwards are we going to slide?
2) How long will the slide last?
The answers to these questions are actually related so it’s not as up in the air as you might think. Basically the logic is like this: if prices return to a more “normal” level they’ll stop falling.
That assumes a bunch of things, namely, that there is such a thing as “normal” and that normal is South of where we currently see home prices. I don’t think I agree with either of those ideas but I can’t fault those who do.
Which leaves one conclusion. If I think there’s no such thing as normal and I don’t think homes are currently over-valued, then won’t we expect to see a big crash soon?
The short answer is yes.
The long answer is, it’s up to you. If you begin investing now, begin taking advantages of the opportunities the market is presenting, then you’ll not only make a killing in a very short time but you’ll actually end up extending the rise of home prices.
It’s up to us. I’m putting my money where my mouth is and I encourage you to do the same. So get with it already and make a difference.