This is an amazing period when you can buy new house with full warranty and still 20-30% below used houses. I don’t think this period will be here for very long. Once builders clear out the inventory, they will again go back to sell based on profit margin. I don’t believe that buyers can get better deal than current inventory sales once inventories are gone. Builders have the ability to stop or delay building indefinitely. In a year or two, you may start to get unbelivable bargains from used home owners because their wall of resistance will collapse, but you may not continue to get the same great deals from new home builders.

No matter in stock market or housing market, you specialize in a narrow sector and that will increase your profit. Like in housing market, you focus on certain price range, certain types of housing, like for me, I focus on slightly less than median price level price, like 350K to 400K, and I focus on townhouses, and then I focus on one close by regions, get no more thant 200 miles away. By focusing, I don’t have to deal with differences in landlord/tenant laws, I will get very familiar with this county, the court procedure, the MLS listing procedure and etc. Right now, I pretty much need no help from real estate agent to handle any of my rentals. You get focused, then you will find market inefficiency and prosper from it. More example, I focus on DC metro, especially the rich counties like Montgomery and Fairfax, I read all kinds of free government analysis and development trend report, zoning trend and migration trend, then I will understand that my market is still long-term under valued in terms of housing cost.

because every body can join the race at any time. There is no loan application, not renting out to tenants, no repairment, no MLS listing. The barrier of entry in stock market is minimal.

However, the bad part is stock market is in general very unpredictable and very risky in nature. It requires great psychological mindset to win. So, even if it’s easy to participate, it’s also easy to get carreid away and lose.

You can also lose in real estate, but once you understand how the housing market works, eventually, you will use the power of leverage to make unthinkable money in real estate than stock market. Housing market is slow, but potential is huge.

It will take stages. First new home builders will liquidate inventory homes. They will back-add forfeited deposit from ex-buyers into reducing the price, potentially you can 20-30% discount from inventory new homes. However, these inventories will be cleared away in 1 to 1.5 years. Then, builders will go back to normal sales. You probably should not expect inventory price any more. Remember, builders always build for profit. If they don’t have any profit, they will delay marketing and put the project on hold or sell very slowly. Thus, inventory sales is once in a cycle (10 year) opportunity.

Real estate investment is not an instant rewarding investment vehicle like stock/option. And the barrier of entry is higher than stock market investment. In other word, if you screw up in real estate, you could also lose big. For example, you bought a house at too high a price, causing you negative cash flow no matter how aggresive you try to rent it. However, if you be careful on most aspect, such as cash flow, exit strategy, holding and landlording strategies, then, real estate can become the most profitable business.