The Expert Podcast

So this may seem counterproductive, but some experts are saying that the best opportunity to purchase real estate might be right now. Now I get it: the real estate market is in chaos, rates are high, prices have run up quite a bit over the last couple of years, and there's a lot of talk about whether there's a real estate crash in the works, another, uh, Great Depression in the works, or some type of real estate decline that is pending. Well, in reality, many of the historical opportunities for real estate profits have come right after a run-up. In 2008, there was a run-up of five, six, and seven. In 2008, the prices went down, declined, and stabilized, but some of the best deals on real estate happened in 2009–2010. People who bought real estate in those years probably made more profit than people who even had a vehicle or had real estate that carried through the downturn. Why is that? Well, right now, interest rates are up, and people are hesitant to buy property because they think the price is up, so it's counterproductive.

Look, you buy low, sell high. When prices are going up, it's easy to jump on the bandwagon like everybody else and buy real estate, but the key word is like everybody else, and you're going to be buying on the way up. If you purchase when everybody else is afraid to buy, it's kind of like when stocks go down, that's when a lot of buyers will get good deals on stocks. Look, it's not for everybody; there is some risk involved, and prices may go down again, but real estate is a long-term play. Even after the crash of 2008, at the very lowest valuation for real estate after the crash of 2008, even if you owned real estate at the height of the market in 2007 before it crashed, if you kept your real estate for four years, by 2010 or 2011, it was back up to what it was before the crash.

So buying even at any kind of little dip in real estate gives you the potential—no guaranteed potential—of maybe seeing the upside. And there's also a little more inventory now because people who are holding back on selling are now putting some houses on the market. It's a counterproductive, counter-intuitive move. A lot of people want real estate prices to go down so they can afford a home, but what if they don't go down much more or only go down a little bit? You can try to catch the bottom or time the bottom, but that may be an exercise in futility because if it starts going back up, you're going to be rushing in with the rest of the crowd again.

There's no right or wrong answer, but it's just something that some investors are looking at when buying real estate. Look, the big companies are putting their money behind real estate right now. All the hedge funds, including BlackRock, are buying up single-family homes, so they must know that it's a safe bet and the prices aren't going to go down. They could be wrong, but again, they're billionaires, and they've been doing this for a while. They don't become billionaires by making a lot of incorrect guesses.

So if you're a potential home buyer, even if you guess a little bit wrong, even if you're a couple of years off, you'll at least be a homeowner faster than a renter and maybe participate in some upside potential in the market. But then again, it could crash and you could be in big trouble, but only history will tell. But it is an opportunity to look at prior history and what current real estate investors are putting their money behind.