Real Estate 2006 - BOOM or BUST?

The local newspaper, the Oregonian, published an article just last week regarding the state of our real estate market. It was all rosy. The Oregon economy is strong, the unemployment rate is low, and businesses are booming in general. Plus, our interest rates are still at all time low. From a technical standpoint, all indicators are pointing to another great year for real estate. There just isn't any signs of a slow down whatsoever, unlike some other "HOT" markets around the country.

What worries me is this: the real estate boom or bust is NOT dedicated by economic indicators. It is, like the state of our economy, dictated by the confidence of the people who are buying and selling real estate. It is dictated by all the behind the scene talks among people during parties, dinners, or other casual conversations. If there're enough people who say the so called "Bubble" is going to burst soon and people believe that, then without a doubt, real estate is going to hit the downward trend. None of those technical indicators can tell us that. It is "we" who decide the fate of our investment collectively.

Despite that our economy is going well (probably one of the best in the last 20 years as far as Oregon is concerned), there're still people who fear the bubble is going to burst any time soon. These are the people who create the chain reaction. Empires, economies have fallen due to collective confidence, or the lack thereof.

So judge the real estate market yourself. For those who are buying a home for yourself to occupy in, have no fear. The real estate market is like seasons. It will go up and it will come down. But over the long run, it always does well in any market, anywhere in the world. For those who are doing it as an investment, then timing is everything. If your investment strategy is for the long term, again have no fear. Just wait for an opportune moment to reevaluate and sell what your own. If your strategy is for the short term, then look at the economic indicators and evaluate how long the strength is going to be there for. For those who uses a mid-term strategy (4 to 5 years), well, I think that's the trickiest. A lot of things can and will change in that period of time. Perhaps it might be safe to scale those strategies to prepare for a short term exit. That should be part of parcel of your investment game plan.