As I have previously written, I have been gradually putting more money into the stock market over the past several months. Now, however, I am getting a feeling that the bad news has finally been priced into the stock market. Even Bernanke is finally talking about a recession, and even the clueless National Association of Realtors is finally admitting that housing is in decline and that recovery may be a ways off. With all this negative talk it seems to me like the stock market may actually be ready to start a gradual bounce-back over the next several months.
Don't get me wrong. I expect volatility to continue for some time to come, as yesterday's dramatic gain in the markets clearly demonstrated. However, it is possible that the long term trend may be about to turn positive. Since I am not a believer in hunch investing or in market timing, I will continue my disciplined and deliberate approach of regularly investing the same amount of money on the 15th day of every calendar month, regardless of what the market is doing.
What is new for me is the sense that real estate may actually be turning into a reasonable investment. And, even though I have previously written at length in praise of renting vs. owning a house, I am now, for the first time ever, toying with the idea of buying a house. Even here, in the most expensive part of the San-Francisco Bay Area, prices seem to have mitigated somewhat and the number of houses on the market has increased substantially. It used to be that the asking price was a mere starting point for a furious bidding war. This seems to be a thing of the past, at least for now. My wife and I have noticed houses staying on the market longer, and a larger number of open houses in our neighborhood are held not just on Sundays but on Saturdays as well. Even more intriguing is the fact that a house on our street was recently sold below its asking price. Am I still living in Northern California? Is this a sign of the end of days? (repent!)
For now, prices in this area have not declined siginificantly, but I have a hunch that we may be seeing some declines in the near future. Our current lease will be up for renewal in October. Would this be a good time to jump into the real estate market? Should I abandon my long held beliefs in diversification and in the long term supremacy of the stock market and sink our hard earned savings into bricks and mortar? I don't know, but for the first time in a very, very long time, I am starting to think that this may be a sane option. What do you think? I am interested in hearing from everyone, but especially folks from the Bay Area.