Jesse & Kathy-You are right on the ball. Real Estate has been a great investment. Those who own it need to stop crying about the correction. In the last 10 years the return has been great. Somehow the consumer got spoiled and want daily positive returns. That is just not realistic. Have a safe and Happy New Year!

Real estate is local. Not all markets are up.

When I moved here 3 years ago, there were some cheap condos for $50,000.  They went up to $120,000 and are now down to about $80,000. 

When you got into the market is almost more important than what you bought.  It will be interesting to see just how far down this is going to go.

I agree that real estate markets are local. We have lived in the same house since '78 and I really appreciate how it has appreciated in value. Back when we bought the house, Brentwood was a sleepy bedroom city of Nashville full of "drunk" Country music stars and a whole lotta wanna be's. Who wudda thunk that 37027 would be the postal zip to have today.  Have a GR8 '08!  8-)

Mark Horan PA Keller Williams Kissimmee, Florida: Agreed.  Real estate, like stocks, are long term investments.  There is short term money to be made but the risks are great... funny how no one complained when they gambled and won... why cry now?  Deal with it.  Happy New Year to you as well!

Access San Diego:  Very true.  Even in the most dismal markets, I'm willing to bet that the long term trend is up.

Matt Kofsky:  The gain isn't as big, but so far they're still ahead of the curve.  We have some hear I could just kick myself for not buying... cute little condo's that were selling for $45K max are selling 5 years later for $119K.  I had too much money in new construction projects at the time, but what a deal.

Adam Brett - Fullerton, California Realtor: I think you're right.  The later you were in getting into the game puts you more at risk, but I still say long term trends will be up... it might just take 5 years or so to recover if you bought at the top of the curve.

Michael Thornton: It's amazing how things have changed over the years.  We're busy looking at what's happened in the past 3-4 years.  We bought 30 acres land on the coast in what was the sticks of NC in '94; it's worth more than 23x what we paid for it... and it's still climbing.

Jesse and Kathy, I totally agree with you.  Over the long haul, it is difficult to lose money on real estate IF you hold onto it long enough and only sell in a sellers market.  Yes, get the facts first.

JESSE & KATHY - This post is a perfect example of good information that is realistic.  Too many homeowners think that they are losing money because their home isn't selling for as much as it was a few years ago.  Unless you bought a few years ago, you're probably not losing money.  As you pointed out, you don't lose or gain any money until you sell.  At that point, if you sold for more than you paid, you made money.  If you sold for less, you lost money.  Simple equation that seems difficult for many to grasp.

That's exactly what I tell sellers when they ask about losing money on selling. Are they going to sell for less this year than they could have sold at last year? Most likely. But on the other hand, if they've owned the property since, oh, maybe 2002, they've enjoyed at minimum a whopping 100% increase in equity -- and their values have doubled, in some cases tripled, and they did nothing to get that boost. Now it's dipped a bit, but they're still way ahead.

I just had this conversation with my neighbor who is looking to sell. The first thing she said was "ohh boy, I lost $40,000 from last year".  I told her she didn't lose anything as her house was over inflated and she would have had to spend more to get what she wanted. Now her house is less but she can buy what she wants for less.

Oh, there are tons of these stories. My lady from Palm Coast is whining about losing money on the land. She, however, tends to forget that she bought the land 4 years ago for $80K, and she whines that she can't get $250K for it today.

She calls it a loss. Where is the loss? Show me the loss. They want to live on the elevator, which is one way only. Guys, it will be so painful, when you fall.

It is not an elevator. It is a hill. You work hard to get to the top dragging the sleigh, and then you slide down and enjoy the ride.

Hi, Kay: Thanks for stopping by!  Glad to hear from you. So, we ruled out a few get rick quick flippers... real estate is still a great long term investment.

Adam: It does seem simple unless sellers are counting every unrealized nickle of equity. That's where they tend to muddy the water. 

Elizabeth: I think it's a glass half full/half empty thing.  If I had seen a 70% increase in my property value I would be very happy... well, until the tax max came around.  I'm pretty happy to see a 25% increase over the past few years.

Steve:I've heard the "I've lost..." comment a few too many times.  Nothing is gained or lost until they actually sell.  You're right on the money... her house is worth a little less but what she buys will also be a little less expensive.  Sounds OK to me.. certainly better than selling for less and paying more.

Hi, Jon: I think I'm going to stick a 2.5MM price tag on my house... I won't get it but I can revel in the perceived equity.  If she gets anything above the $80K, she's ahead of the game.  Problem is, she wants to be light years ahead.  It just doesn't work that way.