All real estate is not created equal

I read today that real estate prices are in free fall, almost back to their 2009 bottom. It pisses me off that what might have been one of the last decent investments available to working Americans is now in danger of losing most of it's value. And yes, I blame the investment banks and their government cronies in Congress, as well as the fat cat bureaucrats at Fannie and Freddie. And I don't discount the greed and stupidity of the American bubble-buying public either.

However, I would like to make one point that the macro folks seem to neglect to mention...and that is that good real estate has not fallen as fast and as far as  crummy real estate. This might seem to be an obvious point, but I've bought a couple of pieces of rental real estate since the '08 crash, and although their appraised values have fallen slightly, they are both rented and flowing cash.

I've been reading about New Orleans, which happens to be one of my favorite cities in the Deep South. How the population has fallen to just 350,000, and how bad the real estate  market is there. I was interested enough to go to the Trulia website, and page through dozens of pages of post-Katrina foreclosures and other homes for sale. I was wondering if there were any bargains to be had in the French Quarter and the old Uptown, Irish Channel, and other historic neighborhoods.

The short answer is that you still get what you pay for. Nice apartments on the Mardi Gras parade routes still run in the upper six figures. While it is true that there are blocks and blocks of cheap foreclosures, most of them are in dangerous neighborhoods and worthy of being bulldozed rather than rehabbed.

I read that in Vegas that new home building is up, because nobody wants to buy a house in the zombie neighborhoods that are full of empty foreclosures. This is the town hardest hit of all, the worst market in the country. They are building new houses.

Now, the deflationists may be correct, and real estate may crash again, and  not turn around for twenty years or more. I don't know. But the fact is that in twenty years I'll be seventy-five years old, and I probably won't give a damn.  Meanwhile this is the time in MY life when I might be able, for once, to afford that kind of investment. It makes for interesting choices.