Crisis Investing 101: Real Estate Assets Provide Safety in Good Times and Bad

Real estate used to be the bedrock of many investors' portfolios. It used to stand the test of time as a sensible, solid investment across most every economic situation. That was until 2007, when the entire real estate market experienced what was unthinkable only a few years earlier: It plunged in value.
The real estate bubble that led to a stock market crash and the subsequent Great Recession is a story most people know: Overzealous lenders were giving away too many bad loans, while builders with access to easy money were developing too many homes. Everyone was happy and home prices soared.

 

But as home prices went up, people needed to borrow a lot more money. And eventually, those lenders couldn't afford to keep up with all the defaulted loans from bad creditors. Meanwhile, the oversupply of homes started to punish prices lower, leaving many homebuyers stuck owing way more than their homes valued.

Despite the real estate crisis, many savvy investors used the downturn to buy properties at bargain basement prices that will likely create profits regardless of what happens with the overall market. And indeed, just recently this downtrend in prices started to stabilize. Statistics from around the country are indicating upticks in prices and demand. (more)

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