CNN Money writes this article about the housing market continuing to slump. If you look at the numbers, they are not unbelievably bad. It’s been a gradual slip back reality which should have been expected after one of the biggest housing booms in United States History. Seriously, take yourself back to 2003 and 2004 when you had to actually had to outbid other buyers above the asking price in some housing markets. That’s how crazy it was getting in places like Arizona, Florida, Atlanta, New York, and California.
The numbers in this article suggest that the slumping housing market is merely weeding out the people that weren’t serious about selling their house. They thought that they would just throw their house up at a ridiculous price and see if they got any bites. Those people are pulling out the market, and we’re starting to see a housing market that our parents are used to – a buyer’s market. You still won’t get a GREAT bargain in this housing market, but now you can negotiate the closing costs, the seller paying for the home inspection, and other smaller fees that go along with closing the deal.
In my opinion, this is actually a good thing for the economy. Once the housing market is finished cooling off and the foreclosures settle down, you will start to see a housing market that boasts steady, solid growth. This is the kind of trend you want to see in the housing market and the stock market. Think back to the late 1990s when people are jumping up for joy in the dot com stock market boom. Guess what happened? It went back to reality. Day traders and single stock owners lost a bunch of money, but the people that just kept doing what they’ve been doing did not take a big hit.
The moral of the story: The investment lesson is that the best kind of market and the best kind of investment strategy is a methodical, steady growth. Invest over the long-term, faithfully each month and you WILL be wealthy when you grow old. You can almost count on this, because we know that the stock market has average over 10% growth over it’s lifetime. The housing market has been the same way. It may have fallen the past 3 years, but over the long-term it has produced solid, steady growth.