Anecdote.
We sold our large house last March. We realized it was not a good long-term investment as the carrying costs would be not worth it over the long term. (the size of the home being the issue, as well as the way it was built).
I went to the lawyer's office to close and he said how good real estate was as an investment. I said I was looking to diversify. He grinned to my real estate agent next to me.
She said later in the car that they had liquidated everything they own, including their 401Ks, to buy a beach house with a no-doc loan.
Oh well.
We are currently renting and hanging onto the cash. There has been a 400% increase in inventory here in the exurbs of Northern VA so we have much more to choose from if we want to buy again. But maybe we'll wait. Somehow I don't feel the urge just yet.
The only real estate I would invest in now is a home for my family. I think the market is going down soon.
Orlando bottomed in inventory available last April and the supply has surged as of current. Buying a second home/condo as an "investment" today is like buying tech stocks in 1999. In both cases, this is "late stage" buying in an up cycle, or actually at the very peak. Not very smart. Now, stocks are cheap (even more so in late 2002 before the upturn started) and real estate is expensive. Buying high and selling low is not the way to financial wealth.