Real Estate
The Bubble, The Bust and Beyond
By Kenneth G. Winans
eal estate is a form of investment which ordinarily does not
“Rbecome
worthless in periods of drastic financial readjustments…
One thing about real estate, however, is that it is not always
readily saleable on short notice.
— Investment Fundamentals
Babson, 1930
”
With a decline of 24% in US home prices
since its record high in March 2007, this
year marks the longest real estate bear market since the beginning of World War II.
There is much public debate about when
housing’s problems will end and a new
bull market will begin. In fact, Fortune
magazine’s recent cover article is titled,
“The Return of Real Estate.” On the very
same day, Treasury Secretary Timothy
Geithner told Congress, “It will take years
for the housing market to come back.”
So, who is right? Financial history can
provide us with some important insight
into the longstanding pros and cons of
real estate investing and clues to its future
as a popular investment choice.
00000
250,000
50000
Winans Intl. Real Estate Index
1830–Present
200,000
00000
150,000
50000
100,000
00000
50,000
50000
0
0
1830
60 Financial History | Spring/Summer 2011 | www.MoAF.org
2011