Timing is everything... maybe

We all know about the stock market crash of 1929.  Bubble heads have tried to compare the run up in housing prices to the stock market crash for the last several years.  Maybe they have a point... maybe not.  This isn't about that.  This is about what people DON'T know as often. 

When I looked up the crash, one of the very first lines was this...  "The market did not return to pre-1929 levels until late 1954,^[3] and was lower at its July 8, 1932 level than it had been since the 1800s." Source...

But, the part that gets glossed over is that in order for that to be true, one would have had to have bought the Dow 30 at its very peak.  If one bought at the beginning of 1927, they would have recovered before the eve of World War II (only to get hit again as the world moved to war).  They would have recovered again fully by mid 1945.  That would be eight and a half years earlier.  Eighteen years.

If one had made their buy in 1923, they would have been fully recovered by 1934.  So, that means the recovery was inside of 11 years for those folks, rather than the 25 years for the people at the tippy-top of the market.   

Keep in mind that the market slid into 1932.  It just kept going down.  But, if one bought in the beginning of 1931, they would have been fully recovered by 1946.  Fifteen years.  

What about someone that just got really lucky?  If one bought when the market was down, at the end of 1932... 60+% increase in value.  Even a buyer at the end of 1931, by 1934 they would have been up by 33% or so.  

What does this have to do with real estate?

Part of me wants to say "almost nothing."  But, there is a point.  Properties are like individual stocks.  Local markets are like sectors.  And, the best opportunities for huge profit are AFTER THE CRASH.  But, before the crash and during the crash aren't that bad.  Granted, buying at the top of the bubble sucks.  But, the people that didn't buy at the absolute top recovered in a fraction of the time.  And the ones that bought before the bottom, but after the bust profited quite handsomely. 

There are some serious differences with real estate.  To start with, stocks don't make a very good shelter.  You can't live in the NYSE or NASDAQ.  Next, houses aren't nearly as liquid.  So, things move less.  The swings aren't as hard or as fast, because the market can't "correct" itself in a few days.  

In the case of real estate, while the price correction isn't as fast as a stock correction, it is much less frequent, and the swing won't be as violent.  Sure there are people talking about 20% decreases in value... but those are in very limited markets, just like the 95% losses in stocks have always been limited to specific issues.  And, seldom is real estate worth nothing.  A stock can tank and the company can go away.  But, the real estate is pretty much fixed.  Not much has truly disappeared without notice...  

So, the bottom line is that the best opportunities may be right now.  They may have been last month... maybe June.  We don't know.  What we do know is that the bubble has popped...  The bold will profit.