Here are some of the benefitsof investing in a down real estate market from an addition to the wiki by Peter Vekselman - he has an interesting take on the market.
The real estate market being down is not necessarily a bad thing. Sure the credit worthiness of investment banks and even the general public is being questioned, but all is not lost. 
In fact, the silver lining is, oddly enough, real estate itself. Real estate is still worth something, though not at the hyper inflated values you may have been seeing a year (or even half a year) ago.
That’s good news; people with liquid assets can purchase many of these properties without having to go through the much-tougher practice of getting a loan. Or, if you are able to get a loan, you are in a much, much better position than the majority of the country.
But other than money, here’s a quick run down of the other benefits of investing in a down real estate market.
1) Real estate has become a long-term investment. There are some idiots out there who think they can flip in a down market, but the handful that do are really, really lucky.
Real estate will bounce back; it will not reach the levels it did but at least you will get a return on your investment. The old saw in investment was to purchase while the stock was low and sit on it until you saw it grow. You need to do the same in this market.
2) If you become a landlord through real estate investment, you will find that your money is returning on you at a better rate than purchasing highly volatile stocks, bonds, or even commodities would right now. The overall return for a year will be about 6% or so; much better than bank accounts or even certificates of deposit.
3) Renters are plentiful. In this market, people are losing their homes but are not becoming “homeless.” They are turning to landlords to find a place to live while they recuperate and try to regain the losses they have suffered.
Many of these people are unfortunate enough to have been caught in the mortgage meltdown without any mis-steps of their own.
4) Others, even if they were in a house they could not afford, are still hard-working people who were sold a bill of goods by mortgage lenders. Finally, because housing is a crashing market, new housing starts are at a record low. In fact, they are at the lowest in decades so there will be no real competition from new home sales to hamper your purchases. 
5) The only other competition is other foreclosed homes or homes where people are up side down and in need of at least some quick cash via a short sale. Down real estate markets should be no barrier to your investment in the market, especially if you are smart and do your homework before hand.
Pick the right location, the right tenants, and the house and you will be glad you invested in real estate during this down market period.
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