Monday, June 30, 2008

Stock Market down 20% since October

The S&P Index which tracks a broad section of stocks, is down 20% since October highs. My own stock portfolio is only down about 15% in the same time because I have a decent sized portion of my investments in energy focused index funds which have gone up in value. I have an equal amount invested in single family Real Estate (I invest 50% in Real Estate and 50% in the stock market). During this same time that my stocks have taken a beating my Real Estate holdings have performed at ??? The reason for the question marks is that there is no similar direct measure since each piece of real estate is unique. Based on what I see on pricing trends (determined by sales reports and and tax valuations) the value of Real Estate in our markets is fairly steady, in fact according to the tax man my properties are worth more than one year ago. At the same time rents are pushing higher as the supply of single family rentals is tightening so the value of my homes, based on revenue, is definitely up. Even if I didn't get one dollar more in rent/month, I have little or no vacancy at tenants turns, providing me with higher annualized revenue. Three years ago I allocated one month of vacancy (lost revenue) at every tenant turn. I have had three tenant turns this year with a total of 7 days lost rent for all three turns.

So, if you think the bottom is reached on the stock market, then buy stocks now - at the bottom. If you think the stock market is too unpredictable, then buy CD's, treasuries or real estate. In our markets it will be hard for real estate prices to go much lower, read my previous post http://blog.primeprop.com/2008/05/should-i-buy-investment-properties-now.html and you will better understand why.

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