COLUMN: This is the wrong time to buy real estate

“Computers will never replace the rolodex”, and “air conditioning will not catch on in Florida”. There are other predictions that should cause you to wonder what planet some otherwise bright people ride on. If the above headline were to read “real estate prices will go lower”, I confess that I don’t know the answer. Some real estate prices will go lower, though I believe only temporarily. Most prices will go higher, and in almost every case, much higher.

The truth is, Florida real estate prices haven’t been this low in 10 years. Mortgage rates are as low as most of us can remember, and sellers are not at all demanding about terms because they can’t afford to be. A conscientious real estate adviser would say “Don’t be stupid. Buy when it is least expensive to buy, if you can.” (Most of us have already tried the “buy high, sell low” approach.) I submit that the question now is not whether or not you should buy, it is whether you can buy.

Don’t buy something you cannot hold. But If you have the opportunity to buy an income property that will hold itself until the market stabilizes, do it. If the price is so low that you can buy and hold the asset without threatening other necessary expenses or existing commitments, do it. If you can buy a real estate asset and with your own energy or reasonable investment increase its value, either to get rid of it quickly or to hold it over time until its value comes back, do it.

Watch every great investor. In a bad market, he or she will lose money, and if the market really falls apart, he may lose more money than he can afford to lose. But they won’t stop. They will gather themselves, maybe learn from the experience, and get back in the market. They may take slower and more conservative steps, but they will be back. They know that only future gains will make up for past losses.

There is a reason big banks and financial interests are building investment pools to buy into the mess they’ve made. Even if they don’t have the resources to buy and hold, they are pooling their resources to recover losses by taking advantage of low- cost money and the low cost of cast-off assets. You should too.

Please don’t misunderstand my advice. Spending is different from investing. Those who believe I am suggesting a rampant return to consumerism haven’t seen the car I drive. Even if you have committed to heart the difference between spending and investing, don’t make speculative or risky investments.  But we all know, or can learn, the cost to build. We also know that neither residential nor commercial buildings will be offered on a long-term basis for less than the costs to build them. We also know that quality construction and location will always have demand.

There are some signs about what to expect in national economic trends, even as far out as several decades. You shouldn’t like most of those signs. Nevertheless, I truly believe that if one day it is truthfully said that the first 10 years of this century ruined us financially, it will be because we were too frightened to get back in the game. Again, please understand. I don’t know the circumstances of each person reading this article, and therefore this is not whole-body-in advice. But at the risk of mixing my metaphors, get back in the water.

Mike Chesser is a Board Certified Real Estate Attorney with Chesser & Barr, P.A.