It seems like most Americans are ill-equipped to deal with the vagaries of real estate. This does not bode well considering the high cost of an investment that can run several hundred thousands of dollars. From the NY Times: It Seemed Like a Good Bet at the Time:
One such owner, who requested anonymity rather than risk the embarrassment of exposing a financial blunder, bought a house in Port St. Lucie, Fla., as an investment in April of last year and financed the $410,000 purchase with an ARM, with an introductory rate of nearly 7 percent. The loan was an afterthought, since he expected to sell the house almost immediately for a profit. He didn’t, and now the developer recently sold a similar house in the neighborhood for $325,000.
“I just didn’t know what I was doing, and I shouldn’t have done it,” said the man, who does not have enough equity in the house to refinance and who will run out of money to pay the mortgage in 10 months. “Maybe the Lord will send a miracle.”
Presumably, the best time to buy real estate is when everyone else is losing their shirts, not when everyone is talking about all the quick money to be had. With houses as with stocks, buy when everyone else is selling, sell when everyone else is buying.
