At the height of the mania for real estate (perhaps 2006 for residential, 2007 for commercial) the popular mood among investors was the sky’s the limit, look at recent appreciation, everything makes sense, drain your liquidity and borrow to the limit, etc., etc.
In retrospect, we were all drunk. Very few escaped the party atmosphere, although remarkably, many now claim they did.
I’d venture to say that everyone who bought then was speculating, rolling the dice.
Now that values have collapsed, buyers should be more characterized as investors than speculators. They are more likely to make money on cash flow than previous owners because they can slash rents below prevailing levels, attract tenants, and beat the competition who have high basis prices.
Additional evidence: When, throughout history, have RE buyers made the most money? When things look bleakest! Try 1933 anywhere in America, 1975 and 1985 in CA, 1995 in San Diego. Also, some of the price action of the REITS and other bottom fishers now suggests a bottom.
I am certainly not calling a bottom, and investing now is not for the faint of heart. But there are postiive signs out there along with all the negatives that many on this site are downplaying.
