Why is it that popular media are such lemmings? Maybe I should not start out a post that way, but I get so annoyed by the lack of analysis and thoughtful commentary out there about almost any topic. Of course, my topic is real estate. Frenzy. Bubble. Meltdown. Blah, blah, blah. Yes, a lot of people have lost money in or around homes, mortgages, financial derivatives, etc. But mostly they lost money because they made bad decisions, bought things they couldn't afford, sold (or bought) investments that were extremely risky or some other version of believing that things that were too good to be true were actually true. That rarely happens.
If you buy a house THAT YOU CAN AFFORD at the market price and live in it for a few years, a decade if possible, you will own something worth more than you originally paid for it. A house is not a liquid asset; not something that should be bought one day and sold the next day, or even the next year. If someone sold you on the wisdom of "flip this house," that's an indication that your thinking needs to be re-thought.
I have been buying real estate since the late 1980's. First just to live in and later for a living. So far, I've only sold 4 properties, each one for substantially more than I paid for it (including improvements). Two of those properties I sold were homes I lived in and two were investment properties. Real estate investing is not for everyone, but living in real estate is pretty much for everyone. In general, one should tune out the media and focus on very fundamental questions: do I need to live somewhere? where would I like to live? do I think I will live there for at least five years? what can I afford each month in a mortgage payment?
If you are going to be around for a few years, and you can find something you like at a monthly payment you can afford, buy it and forget about it. I did that in 1999: $450,000 for a row house in Dupont Circle. My next door neighbor's house (same size and condition) sold earlier this year for $1,350,000.