RE investing vs. Stock investing

[tourbillon_IHB]

<p>After watching this blog for a while, I can honestly say that I have a fairly clear picture of what any given RE SHOULD be priced at, and therefore I think in 3 to 5 years or so, RE in S CA will become attractive again ( I believe after 40 to 60 percent correction in price). On the other hand, despite the information available on any given stock, it is very difficult to determine the CORRECT price for a stock. A pricing model for any given stock is almost impossible to build. Index is much better, but even so, it is very difficult to build a long term stable leveraged position using index. I am wondering if this makes RE a much better long term investment than stock because it is much easier to determine the correct price and you can have a long term leveraged position. </p>

 

[effenheimer_IHB]

<p>Over the long term, RE inflation outpaces general inflation by about 1%. So in theory, RE is a poor investment class for the value investor. In reality, many markets are cyclical (especially ours) and a properly timed buy/sell can be lucrative.</p>

<p>That said, if this bubble unwinds fully, I think it'll be a good long while before the next boom phase sets in. We've got boomer retirement, peak oil, and global economic rebalancing to deal with. Over the next decade, I think we're going to have much more pressing concerns than bidding studio condos up to a quarter mil again.</p>

<p>As for your thoughts on the "correct pricing", I agree fully. That's why it frustrating to try to analyze podunk RE markets: Poor access to sales/inventory data.</p>