Myth #1: Real Estate Prices Always Rise
“Buy land,” the adage goes. “They're not making any more of it.” That's true as far as it goes, but housing markets can be a lot more volatile than the saying indicates.
Ask anyone who lived in Texas, Anchorage, or Boston in the late 1980s, or Southern California from the early to mid-1990s, when home prices in those areas plunged. London and Tokyo are among the international cities that have experienced housing price crashes.
Once house prices fall, they can take years to bounce back. Home values in Los Angeles dropped more than 20% on average and took a full decade to recover their former peaks. Hundreds of thousands of homeowners were “upside down,” owing more on their mortgages than their homes were ...
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