Tuesday, October 7, 2008

All Parties Agree

Having just finished watching the second Presidential debate, and not sure I am at all the wiser, I realize that all parties agree on one issue. We are in the midst of a crisis. The Dow fell another 500 points today, and there are reports saying that the global economy is heading for a `Major Downturn' in 2009. If we are heading for a major downturn, maybe somebody could explain to me what this is we are already experiencing.

The Bailout Plan is now in effect, or has at least been signed. When and how it will affect the greater picture is still an unknown. It will "free up credit" which is supposed to prevent the bottom from completely falling out. And if the bailout plan doesn't work? Who cleans up that mess?

If only we did have that crystal ball. People are always asking us what we think will happen to prices. "How long do I have before prices start going up again" or "How much more will prices go down?" Of course we do not have these answers, and clearly neither does anybody else at this moment. We are treading in unknown waters right now.

If we had that crystal ball, we could have told all of you months ago to take your money out of the stock market. Maybe some of you did have the foresight to do that. If so, where did you put your money? At least the FDIC will now insure up to $250,000, so hopefully that will help you sleep a little bit better.

There is one thing we don't need a crystal ball to see. Real estate does not disappear. Barring a major earthquake, or the Bay Area being completely under water as a result of global warming (ok, either one of these things can happen), your San Francisco real estate investment is safe in the long run. Even if prices fall, and they have only fallen slightly in most San Francisco neighborhoods, they will eventually recover and then rise. A long term real estate investment, which is what they should be anyway, is your safest bet; now more than ever.

No comments: