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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (364)	8/28/2001 12:42:06 PM
From: chomolungma	Respond to of 306849

It is not hype to point out that real estate is the only commodity that a person can use, abuse and actually turn around and sell for more than he paid. I think you need to focus on your very own words. You called real estate a commodity, which is exactly what it is. A commodity produces no actual return. It's value is only what it can be used for. It is not like a semiconductor fab or a shoe factory that actually produces something. It just sits there and, in some cases, gets older. Therefore it is not possible for real-estate to appreciate in value more than the price level over the long haul. I repeat, it produces nothing. Look at gold, it is similar in what it produces. To get a decent investment return (i.e. above the rate of inflation), you need to leverage the price rise. But even there, your cost of borrowing has to be lower than the rise in the value of the asset. Now, as you point out, the government helps out here, but that does not insure that the price will rise fast enough to cover your interest charges. No amount of leverage can turn a flat investment into a good one.