回复：RE 123

1. Here is a fact of the performance of the stock for the last 7 years: You can easily find stocks and funds have a ROI of 300% for that 7 years. For example: Fidelity Leveraged Company Stock Fund, for the last seven years (about that), the average annual return is 23.39%, so the compound ROI is 335.47%. About the same period, the appreciation rate (total) of RE in CA is 262%. CA is the one of the fastest growing RE in USA.

2. USA RE market may not be over-valued. But CA may be. One of the indicators to the health of RE market is the ratio of the median house price to median income in the same area. CA has as high as 8. The only thing kept the market high is the demand. How many people in CA have an interest only loan right now? This is a big bomb. Normally, the ratio should be kepted about 3-4. High population area can have a higher ratio such as 5. But not 8. I think the RE market in CA will go through a correction stage for the next few years.

3. Rental property bears different risks. Many area cap out the rental fee you can charge. In CA today, I expect the cash flow generated by renting may not be sufficient to cover the mortgage. Of course, depending on how much loan you got. Although I don't have data to prove this.

4. Take in another fact: the mortgage rate goes very high after the subprime loan crisis.