Real estate can still be a great investment if analyzed from a cash flow perspective. Residential or commerical property that produces a positive return after debt service is easier to find now than at any time over the past decade. I'm actually very close to purchasing a second residential rental property in the next month. Here in Atlanta you can purchase a decent small home for under $75K and expect rents of about $950 per month and cash flow $450 per month after debt service. This equates to a 36% ROI for your $15K investment. Not bad if you are willing to put up with managing a property.
Purchasing a house to live in and hoping the to see significant equity appreciation isn't an investment in my opinion however. Even if you see gains in equity you aren't really gaining anything unless you plan to sell and not buy another house because all other properties will have appreciated too. Closing costs and realtor fees also eat up a big portion of any equity appreciation. That said, I still think this is a once in a lifetime opportunity to buy the house of your dreams if you have the credit and a bit of cash. The low interest rates and rock bottom prices wont last forever once all the forclosure inventory is flushed out (who knows when that will be).
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