Housing Market Set For Biggest Downturn Since 2007

Houses OverPriced By 20-40%

Have you seen any Real Estate headlines like this lately? Depressing isn’t it, well don’t worry if you either check the next days paper or find another one you’ll find headlines like this.

Housing Market Booming

New Home Construction Set For Record Growth

I’ve even run into similar headlines to this on the same page, one calling for a downturn, the other calling for a boom and that’s the problem with much of the media these days. They have an agenda.

While they may have different underlying agendas, their main one is to sell papers and headlines that scare people or pump them up sell papers, magazines and TV news which is why you have to take them with a grain of salt.

How many economists, politicians, billionaires and people in general nailed the financial crisis back in 2007? Just a handful.

How many of those had accurate forecasts before that? Just a handful again.

And how many have been 100% right all the time,  if you guessed zero you’re right.

Many of them have just picked a stance and stood fast on it until they were right. In the early 2000’s there were many vocal critics of the housing booms forecasting an imminent crash and for five years plus they held to that and sure enough they were completely correct. Eventually.

Meanwhile the landlords and homeowners who bought at the beginning of the growth were still far ahead. Yet, if they followed some of the headlines and listened to these media experts, they would have missed out.

Now I’m not saying you can’t listen to what’s out there, but you can’t take the headlines verbatim. You need to get more of the facts and look further into the details. There are so many variables that affect housing, the world economy and even the cost of groceries that it’s almost impossible to predict with complete accuracy anything these days.

An unexpected frost can cause orange juice prices to skyrocket, a dock strike can leave fruit hanging in the orchards causing shortages two months down the line, a country dealing with debt can change the confidence of a whole continent and these affects trickle down throughout our very interconnected world.

So you need to stay informed, but try not to let the media headlines cause a panic in your life. The panic of the up and down swings will give you an ulcer or worse a heart attack and it’s just not worth it.

As I told another Real Estate investor a day ago, you have to look long term. The panic headlines today are laughable ten years down the road when you look back at all the cash flow you’ve generated, the amount of your mortgage that was paid down by your tenants and the current value of your investment.

As we’ve talked about before, Real Estate is a long term plan and a long term solution. If you have planned for the long term the day to day and year to year hiccups all even out over time. Having said that though, if you’re getting to a point in time where you  are selling everything off to simply enjoy retirement it may be more important to pay attention to the current market.

Just remember not to get caught up in the headlines and look at the actual details usually buried in the article!