There are a thousand reasons but the most obvious, even 2 years ago, an American debt 350% of GDP. Ponzi schemes rampant from Madoff to Icelands debt 10 times its GDP and more to be exposed.
In fact the whole US economy is a giant Ponzi scheme. One of the main causes has been the inflated prices of real estate.

Real estate is going to take a very long time to recover. However, people will now rent homes as most of Europe. So I guess the landlords could make a small killing but small it will be.
Take good care my American friends.
The Baldchemist

First of all, let me say that real estate is impacted by global events, but it’s still very local. All of the examples you gave Sarah would be red flags for me, and I wouldn’t invest in those areas. That doesn’t mean I wouldn’t invest in real estate. Not every City in the U.S. or in Canada is in ruins. There are still plenty of markets that have good fundamentals…and maybe their property values have gone down but the underlying economic factors for that area are still strong.

Secondly, it’s important to remember that there are three ways to make money from real estate. Property values increasing is only one… and to me it’s icing on the cake, but not the cake! Buy in an area that has a good probability of seeing values increase, but focus on buying a good deal.

A good deal to me is a property that is cashflow neutral or cashflow positive property located in an area with good fundamentals (essentially this is an area with population growth, good employment, a low vacancy rate on rentals and improving infrastructure).

Let’s say you buy a property for $150,000 today. If you hold it for 25 years, put $200/month in your pocket after the expenses are paid and your tenant pays off your mortgage with their rental payments, in 25 years your property will be paid for. Even if that property is only worth $120,000 in 25 years, you’ve still made quite a bit of money from it (and if it’s in a good area, there’s a pretty good chance it will be worth double what you paid not less!).

AND – current market conditions – with interest rates so low and property values declining (but rental demand increasing in many areas), the current market is really full of deals if you care to look.

I could go on and on… but at least I hope this helps a bit.

I actually feel the same way. Currently the real estate values in the areas where renting is optimal continue to drop. There’s this one street that is lined with “For Sale” signs all the way down extending about 2 football fields on both sides of the street. I’m sure that timing is a crucial element of any real estate transaction. Julie, would you care to comment on when the time is right?

It was an absolute pleasure having you guest post on my blog. I do plan on investing in real estate sometime in the near future and I’ll definitely stop by your blog for some sound advice.

And thank you to everyone that stopped in and left such kind comments. I really appreciate the support, and I am glad to hear that you found some food for thought in the article!

Feel free to send me any specific questions if you have them. I am happy to help other people get started real estate investing!

Regards,
Julie

Julie has done a great job. Now she’s retired and she can live life with financial freedom.