2006 ~ no bubble burst

How many times last year did you hear some "expert" say real estate was not a good investment? 2005 was supposed to be the pinnacle for real estate values ~ the highs in 2005 prices would slowly begin to decline, creating what most newspapers depicted as the “Bursting Bubble”. This, after many years of growth and the Federal Reserves reduction of interest rates allowing leverage and creative financing to boost the wealth factor across the Nation from appreciation of personal homes and other real estate investments. However, this illusionary bubble never expanded to the point of popping.

2006 was supposed to be the year of fear. Consumers were told that anything in real estate would turn their hard earned down payments into large losses. However, looking at the statistics, the return on a real estate investment is still one of the smartest money decisions out there. You simply adjust the time frame to reflect the market. Take into consideration
declining interest rates due to the softening bond market yield, incorporated with seller's ideas of value now more inline with current market conditions, the expectation is that consumers can now develop a 5 year investor's strategy.

Did you know that a property purchased in 2002 with 20% down payment per $100,000 dollars would yield a return in 2006 of approximately $118,400 dollars of appreciation equity? Did you also know that the added deductions from interest paid on mortgage loans increased that return on investment? If you didn’t know this fact you need to get real estate advice from a proven professional and quit reading stories from uninformed staff writers or media articles that create nothing but fear in consumers.

Would you invest in the stock market if there were a guarantee of a 100% return on your investment? In other words an investment of 20,000 for a guaranteed 20,000-dollar return? How about leaving your money in a bank or mutual fund for a 12% return? Which seems better to you and has less risk? After all, banks are built every day, but nobody's making any more land. The only thing that holds most people back from buying more real estate is the payments and fear of carrying cost. If you invest in real estate and you receive the tax benefits all year long with continued equity even if the market has ZERO natural appreciation. But did you also know that a miniscule ½% increase in the purchase price per year with 20% down still returns a gross equity return of approximately 8.50%?

Still not convinced? Waiting to buy because of falling prices does not affect the payment if the interest rates are climbing. If interest climbs 1% and property values decline 10% the payment is still the same. Therefore, with prices stabilizing and inline with market conditions and the reduction of interest rates back to 2004 pricing, an investor or homeowner can invest their money and receive the benefits of the adjusted prices plus the lower rate. When can you remember a decline in interest rates along with the adjustment of prices ever happening before? Most times it is the reverse where interest rates are climbing when prices are falling, due to inflation.

I believe there is no better way to invest your cash than real estate. I have found no other investment that creates full control over decisions and that provides a full benefits program that associates itself with ownership. If real estate continues to appreciate at a 6% level for the next 3 years, the return on investment with 20% down will be approximately 70%. Is that good enough? Think about it. What will you do in 2007?