Can You Get Hurt?
Thirty-five years ago, my brothers and I were buying all the real estate we could get our hands on in northern California. The market was moving sideways—if we saw a 2 to 3 percent price appreciation in a year, we were happy. We didn’t care—we were buying for the long term.
I remember my older brother telling me, “The only investment you can’t get hurt on is real estate!” Well, with all due respect to my older brother, that’s not necessarily so. If you buy with the wrong terms and have payments you can’t afford, then you could get hurt by losing your property to foreclosure. If you buy intending to flip in a few months and the market turns on you, you could get burned badly. The neighborhood could turn. And there are other ways you could get hurt too.
But the essence of what he said contains an element of truth. If you buy wisely for the long term and hang onto your properties, they will come through for you. If you buy a home, move into it, and live there, over the years it should make your financial dreams a reality.
How Can House Prices Go Higher?
There used to be a popular radio show host in Los Angeles called Hilly Rose, and when I wrote my first book, How to Buy and Sell Real Estate for Financial Security (McGraw-Hill), back in 1978, he invited me to be on his show. I distinctly remember him asking me, “How can the market possibly go higher? I own a $125,000 home in one of the best areas of Los Angeles, and you’re telling me that it’s going to be worth even more in price. I find it difficult to believe.”
A $125,000 home in one of the best areas of Los Angeles? Today, you’d be lucky to find a shack in such an area for under $5 million. Never get over impressed with housing prices. We always get to the point where we seem to have topped out the market. And yet, in a year or so, the prices seem to go even higher. There is no ceiling on the price of real estate. As long as demand remains strong and the supply limited (remember Will Rogers’ quote), the price has only one direction to go in the long run—up.
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