I lived in a medium sized midwestern city in the 1980’s. A GM plant near me announced it was closing and overnight, home prices in my city dropped between 18-25% depending on where, which school system, etc. A year later I had to sell my house (job related) and move to the East Coast. Two different realtors told me “I’ve never heard of home prices going down, they only go up”. (it was relevant because they couldn’t fathom why I didn’t have a bigger down payment even though I was in the process of selling a house– a MUCH nicer house than anything could afford in the town I was looking in).
The moving truck brought my stuff East and we unloaded in late October 1987 (to a rental). The drivers spent the afternoon listening to the radio as commentator after commentator described “First comes the market meltdown and then comes the housing price plunge”. And within weeks, the prices of the houses I had looked at (before signing a lease for a rental) were down anywhere from 10-30%. The realtors in town all insisted it was “a temporary correction”, but if YOU’RE the person who needs to sell during a temporary correction, a 24% hit in home value could really impact your pocketbook. And the temporary correction lasted at least 4 years– and for high end homes, longer than that.
Then– once everyone forgot that prices go down as well as up, came the Financial Crisis. And woe to the two income families where one party worked at Bear Stearns and the other worked at Lehman. Or woe to anyone- because prices plunged overnight, and began to recover around 2013. Again- temporary, except if you need the cash- assisted living or whatever.
So I am in awe of any small time investor who has only had positive returns on residential real estate. Timing is everything, and having seen parents and in-laws go from healthy to almost incapacitated overnight, I’m not interested in having my retirement tied up in real estate. But I admire anyone who has figured it out!!!