Market Conditions
Austin's Home Sale Guide
Market conditions are variable and investment decisions must be too. It is wise to discuss any potential investments with an objective finance professional, that is one without an interest in the contract or investment being discussed, prior to making any decisions.
That being said, the quality of an investment, as well as its risk, are in large part dependent on the investor. If the investor can afford a certain level of loss, then a possibly risky investment, may be worth the potential pay-off.
The quality of market conditions also depend on the purpose of the investment. If one is looking to "flip" a property, that is buy it for below market value, usually due to some defect, remedy some or all of the problems with the property, and sell it for a profit, one will be looking for something different than the typical purchaser seeking a place to call home. (NOTE: "Flipping" properties for profit is not as easy as some television shows make it seem, and is not recommended for non-professionals.) Someone wanting rental property is looking for still something else, and may find a multi-family property on the hurricane-hit Gulf coast, which a first-time home-buyer might never consider, to be a quality investment because many people view homes in that area as too risky to own, which may artificially inflate the rental prices for a given property in the region.
Another thing to consider is the large number of baby-boomers closing in on retirement age, who as a group are now likely to want to sell many of their stocks and other investments and invest the profits into real estate, which they consider less risky and which require less attention. Such investing will continue to inflate pricing in relation to the perceived demand.
Ex-Federal Reserve Chairman, Alan Greenspan has previously advised investors to not assume that high prices for various assets, including stocks and homes, were permanent. This is good advice that is difficult for the young investor, such as those who grew up after the crash of the late-1980's, to comprehend. Values, even property values, do not only go up, even if they trend upward. And, unless one has sufficient capital to cover one's mortgage payments and living expenses even through a downturn in values, it pays to be cautious when investing the kind of money necessary to buy residential or commercial properties.