The Beginning of the End for Real Estate Contrarians

I read an interesting article this morning on Marketwatch.com. Specifically a piece by Marshall Loeb.

Now as a finance guy I normally skip articles by Loeb and his cohorts at competing web sites, because their content is bland, vanilla, and always so overly general that nothing they recommend or discuss can ever be directly implemented. And after reading them I usually I feel like a cross between the AFLAC duck as he walks out of the barber shop after the “conversation” with Yogi Berra and someone that just got off the phone with Microsoft technical support.

Such is the constraint of trying to dispense deep and meaningful financial guidance in 500 words I suppose.

And the piece that I read this morning was no different, dispensing overly generalized “wisdom” that hasn’t a prayer of being implemented by anyone. So I’ll spare you the  meaningless content.

The title, though was what caught my eye.

It read: “How To Buy Rental Property” and the tag line added “And Take Advantage Of A Down Market”.

????

This is the first time since the real estate downturn started that a mainstream, widely read finance columnist (at least one that I have seen/read) has even remotely suggested that real estate would make a good investment. And in fact most have continued to screech the benefits of continuing to invest in mutual funds and ignore the losses because we should have a “long-term focus”.  (Side note: Have you ever done the math on how long it takes to make back a 30% loss in your portfolio’s value? If not you should – it would be eye opening.)

But this recommendation is really a disturbing development. And it can only mean BAD news for real estate investors.

Why?

Because for most of the last two years investing in real estate, especially in severely distressed markets like we have here in Metro Detroit, was exclusively the domain of the truly contrarian investor. That is, investors that enjoyed swimming against a tide of opinion that was 100% against them, with the exception of other contrarians.

And they have been rewarded handsomely for their resolve.

But now this – this populist columnist – is now suggesting that you need not be a contrarian to invest in real estate?

For me this signals the bottom of the market.

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