Real Estate is still a good investment in Idaho!

This morning I read an article in the Idaho Business Review that discussed home price value declines. It states that  Idaho is "in the middle" in terms of home price declines. There were 24 states that declined as much or less than in Idaho and there were 25 states that fared worse or had higher price declines.

The Boise-Nampa area was reported as having fallen 6% from a year ago.

Now compare that to other investment vehicles and you can see why housing is still a good investment:

S&P - was down 39.3% from a year ago as of yesterdays close

NASDAQ was down 41.5% from a year ago as of yesterdays close

DOW was down 35% from a year ago as of yesterdays close

So, lets take a look at your investments and see what was a better bet. Lets say you bought a $200,000 home on January 1st, 2008 and you put 20% down ($40,000). Now lets say you out $40,000 in stocks on January 1st, 2008.

in stocks today you would have the following (this is on average people, not exact!)

S&P = -$15,720, $24,280 left

NASDAQ = - $16,600, $23,400 left

DOW = $14,000, $26,000 left

Real Estate - down 6% or -$12,000

But all of these are PAPER LOSSES. If you leave your money in the stock market, eventually it will come back. But, here is the big thing to consider - stocks are easy to liquidate. In times like these you can get scared and make rash decisions... like sell sell sell! But houses don't work that way. You cant click a button and sell it. Which makes people uncomfortable because they WANT to make that rash decision and sell it. But, when you sell it you LOCK IN YOUR LOSS. There is a good chance that if you made the investment above in stocks - you would sell it and lock in your loss. Since you live in a house - and you have to live somewhere - you are more apt to keep it and wait for the market to come back so you WILL NOT LOCK IN YOUR LOSS. It is a good thing that Real Estate is not liquid. It takes a lot to buy and it takes a lot to sell - not just a click of a button.

Real Estate still is a good long term investment. And there is something that everyone must keep in mind right now. There is one similarity between an up market and a down market - they both feel like they will NEVCER end when you are in the middle of them... but they always do.

HAPPY NEW YEAR - 2009 is going to be a GREAT year!