“Is now a good time to buy a home?” is a question that has been asked throughout this recession. I know, technically the government economists don’t define this as a recession, but ask any average hard working American, and they, like me, will call this a recession. This is the longest economic and real estate recession I’ve experienced in my life, and it’s lasted now for six consecutive years without reprieve. The real estate market has picked up in 2013, and there are signs of economic recovery, so the question should be asked again, “is now a good time to buy a home?” In this article I’m going to answer this question purely from a investment perspective.
Good Time to Buy a Home
If you have investments and plan to buy a home in the near future, you might be thinking about how best to manage your money and your retirement funds and exactly when you should take some of those funds and buy a home. Here’s food for thought. There’s a time to adjust the allocation of one’s investment portfolio, meaning that there are times when funds should be transferred from one market sector to another. And there are times when the percentage of real estate in a portfolio should be adjusted. Are we in a time when it might be wise to reduce the percentage in stocks and bonds and precious metals and increase the percentage of real estate?
Buy a Home or Stay in Stocks and Gold
Exactly two years ago on the 20th of December of 2011, I wrote a blog on this site entitled, Gold or Real Estate? I wrote, “Right now, today, if you were asked how you want to invest your retirement account and you only had two choices–gold or real estate, which would you choose? . . . [continuing the quote] On November 9th I wrote an article suggesting that gold was headed downward. I wouldn’t hold my breath waiting for the price of gold to go back up anytime soon. It could, especially if Europe slides into the economic abyss, but why gamble? If you ask me where I would put my money, in gold or real estate, it would be real estate now.”
When I wrote that article Gold was at $1,617 per ounce. Now move forward to today. Gold just broke below $1,200, a drop of over $400. At that time the gold brokers were preaching that it was the time to buy gold. They are still saying that today. They were wrong then, and I think they may be wrong again. Anyone who purchased 1,000 ounces two years ago would be down about $420,000 today. Need I even say, “Beware the peddlers of precious metals?” They always say it’s time to buy gold, and I hope you haven’t lost a lot of money since December of 2011 on gold.
Last month I wrote an article on this blog [Real Estate or the Stock Market] in which I shared what many experts are saying, that the stock market is due for a significant retracement, perhaps as much as 15% or more. Some of the same investment rules that applied to the price of gold two years ago are applicable to the record setting Dow and S&P now. There are some strong indications that the markets may pull back.
I cannot and will not play your personal financial adviser, but do you think it might be a good time to shift some of your investment funds from gold and stocks to real estate? Real estate is probably at or near a bottom, but that cannot be said with confidence about gold or stocks.
Should you buy a home or stay in gold and stocks? Well, if I had a lot of money invested, I would take some of it and buy a home in Sequim. In other words, diversify by buying your retirement home now. You can search Sequim homes at Sequim4Sale.com. I’ll add this: As Dennis Miller likes to say at the end of a rant, “Of course, I could be wrong.”
Last Updated on December 19, 2013 by Chuck Marunde