Posted: 29 Feb 2008 02:46 PM CST The Yahoo! finance home page today at one point listed all of the following headlines all at the same time: "Dow Drops 300 Amid economice Worries" "Consumer Spending Stalls in January" "Dollar Falls Again; Euro Zone Divided" "AIG Shares Slip on 4Q Loss" "GM Shutters 3 More Plants Due to Strike" Yet on another day full of bad news, further down on the page was an encouraging headline begging to be clicked on: "Use a Sluggish Economy to Your Advantage" Now I don't know if you're a regular visitor to Yahoo! Finance, but articles like these most often feature fluff such as "Use coupons at the grocery store," or "Don't withdraw from your 401K" or "Don't use your credit card." But today's article was refreshing. It listed six practical, useful strategies to improve your financial situation in a recession or near recession or whatever the experts are saying we're in. And guess what? The first three of the six "use-to-your-advantage" strategies were real estate-related. The three pieces of advice all pertained to the current market. 1. Call the shots when buying a house 2. Buy a distressed property 3. Borrow cheap It's ironic that the real estate slump is largely blamed for the economic issues that prompted the above bad news headlines, yet at the same time it's looked at as a way to capitalize on a sluggish economy. The author is confident in the advice because he knows what we all basically know: Real estate right now is an undervalued asset that is almost certain to appreciate. If it were a stock, it would be rated a "strong buy" in most parts of the country. Yet most of what we read or hear in the media is "Don't buy real estate!" It's borderline irresponsible. Think about this (and Rob touches on it in his post below): Who is likely to come out ahead -- the person who bought his or her home at the peak of the boom, when NOBODY was afraid to buy real estate, or the person who buys it right now, when EVERYBODY seems to be afraid? Public sentiment -- and the rah-rah of the media during the boom and it's fear-mongering during the slump -- are keeping people from making what could be the best investment of their lives. The wealthiest people in history have acted while others stood idly by, afraid. And those who act while others stand idly by during this sluggish economic time will prosper. Mike Sivula |
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