SOUTHERN CALIFORNIA REAL ESTATE IS A WILD RIDE, BUT ORANGE COUNTY LOOKS BEST

Maybe there is truly no comfort for any type of investment in these uncertain economic times, but probably for the first time for the newer generations, it really is hard to predict what’s coming next.  Having said that, real estate, taken the beating that it has, may still be the most resilient product out there.  Why say that?  Take a property purchased in 1990 at $260,000.  That property peaked in 2006 at $830,000.  The market indeed crashed and that same property plummeted in value to $630,000.  Now let’s look at the value left in that property, through the worst downturn in the history of California real estate, and see how the initial investment value of $260,000 is looking.  It is still nearly 2 1/2 times in value what it started at.  Let’s also remember that the owner leveraged their money by putting only 20% down in their own cash investment to achieve those returns.  Let’s also remember that the owner lived in the property and wrote off the interest on the loan.   How do you think this investment has fared over 20 years compared to an initial investment of $52,000 in a dot com or Internet stock that fell on the bubble burst we  all experienced a few years ago?  Most of those investments that were victim of that bubble are completely gone, not worth the paper on which they were written.  This makes for a centering point, one which we all can rally around.  Real estate is a sound investment.  With prices still stabilizing, which will end as we ride out this year, there are opportunities galore.  And don’t think the low interest rates will last forever... ever hear of a word called “deficit?”  Watch what the billionaires are doing, and think about what you want to do. (Figures are from public record documents and sales comparables for value.)