Monday, June 09, 2008

Bueller? Buy for the Long Term

by Osman Parvez
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Ever since Ferris Bueller's Day Off, I've been intrigued with Ben Stein. Not only was he a speech writer to Presidents Nixon and Ford, he's a prolific author of books and essays. He's a pretty funny entertainer to boot. Although few were able to best his knowledge and win his money on his game show, many have gained wisdom from his advice. In his column "How Not To Ruin Your Life," Stein regularly offers straight up, no nonsense advice that often counters day to day headlines.

Today, he published a short essay on the facts of real estate investing. Worth a read, in my opinion. Here's a blurb from Real Estate Realities:

Patience remains the watch word when buying real estate. Even if you buy at the peak, if you wait long enough, you will generally make out well. (Detroit and other cities undergoing serious economic dislocation may require especially extreme patience.) If you expect to turn it over quickly and consistently for a profit, you are taking a risk. On the other hand, the present real estate situation presents a rare and enviable long-term opportunity.

p.s. Although they say you should never apologize for not blogging enough, I still feel a little guilty for the lack of new posts. Sorry for the slow down. I'll be picking up the pace this week.




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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

4 comments:

  1. Did you read the comments to that article?

    It's apparent that investors and homeowners still have a really nasty taste in their mouth and want to have nothing to do with residential real estate. That's certainly an indicator to me that it's nearing a great time for the savvy investor to buy.

    When do you believe the bottom of the national and/or regional markets will arrive?

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  2. Complete and utter garbage.
    Is it news that home prices have risen over the long-term?
    Have not equities, bonds, art, wine, commodities, stamps, antiques, etc.... risen over the long-term, too?
    The article states the positives of home ownership, a tax deduction on interest, imputed rent, etc..., but didn't mention the numerous negatives including maintenance, property taxes, interest payments, illiquidity, etc...

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  3. I'm glad you read the comments in the article. Sometimes I wonder if people are paying attention.

    Nobodyinparticular, you're right. When everybody is running away from an asset class, it's time to start scratching around, in my opinion. But you need a thorough analysis (for intrinsic value) and a strong stomach.

    Anon, you make a good point but remember that one article can't cover the universe of opinion. To make a smart choice, consider lots of opinions and decide for yourself.

    Anyway, in hindsight I think Ben is a little too bullish for general real estate advice. If you bought in a bubble market at the peak, you could be waiting a very long time for the value of your investment to return. If you're buying now in one of those markets, and have a long term horizon, it *might* be a good time but there could still be a ways (down) to go.

    Here in Boulder, of course, we're only just starting to feel the slowdown in the real estate market and it appears to be primarily impacting the higher end. Stay tuned for a more detailed analysis. I'll publish the regular monthly update in a few days and I'll release the quarterly Silver Fern Index analysis at the end of the month.

    As always, thanks for the comments.

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  4. Interesting article and generally meets my thoughts. On the other hand, as John Maynard Keynes said: "In long term we are all dead..." :) I am selling real estate in Toronto for more than 15 years, I think I am pretty "old" realtor, but still 15 years is nothing, when talking about real estate "long term". for ordinary citizen long term has no big importance, because he sells home every 8-10 years and wants the best price...
    Julie

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