Investment in Real Estate may become a good idean in the future, but not until the fundamental price to rental income comes back in line. Until you can rent out the property for a positive cashflow, it is a bad investment.
Foreclosures today are way overpriced. For the most part they go off at the existing loan value -which is still over market. Real Estate Owned (REO) the property that the bank has foreclose on and hired an appraiser to price, and a realter to sell may be better than a direct foreclosure, but still over reality. When the rental income comes in line with the price – that may be the time to take the plunge.
The days of rabid price home price increases because everyone sees it as an investment not just a residence are over. Without the free financing of the early 2000’s a home will just be a home. The equation of rent vs. buy will be forever changed to favor renting. There will be some who just want to own their own home, but prices will need to drop a lot from today’s REO levels to make the ownership equation work.