Rethinking Real Estate Investment in this Economy
If one thing is for certain in the real estate market today, it is this: Investors and homeowners alike can’t make heads or tails out of the market to the point where anyone feels confident about either investing or buying homes.
Sure, investment continues and the buying of homes continues. And while foreclosures are still being added to the market, sales in many areas of the country are steadily – if slowly – rising. But, nevertheless, there is still a lot of uncertainty regarding how to invest in the real estate market, not to mention if one should even try.
We talk a lot about real estate from the perspective of the homebuyer and homeowner, but we also try to touch base on the perspective of the real estate investor – those who traditionally buy property for investment purposes to turn a profit.
The better side for the investor
Investors have probably been a little more successful in the real estate market, particularly the foreclosure market, than average citizens looking for homes, but there is still a lot of uncertainty in the field about when to move in and how to do so. While the traditional way of real estate investing remains, one method – real estate investment funds – has become red-hot over the past year or so.
Over the course of one year, one particular fund, the Vanguard REIT exchange-traded fund (VNQ) has improved by 22% – more than the 17% return of the S&P 500 over the same period. Other REITs have done well, and that is even with the housing market still in the doldrums. Imagine how these will do if the painfully-sluggish recovery picks up speed and climbs upward over the next year or two.
On this point, we believe that investors can see the light at the end of the tunnel. There is probably less uncertainty today about real estate investing than before, and for real estate investors who want a way forward, that is definitely good news.
Real estate is cyclical, and a long-term view, it seems, is still the way to go.