Remember John Paulson…no not the Treasury Secretary who threw billions of dollars at the banks. I’m talking about John Paulson, the hedge fund 
manager, who made 20 billion by shorting the secondary mortgage market during the last real estate bubble. Paulson has been publicly saying that it’s time to buy houses. Yes, plural—houses. He said in a speech in October, “If you don’t own a home, buy one. If you already own one, buy another. If you own two, buy a third, and then lend your relatives money to buy houses.” Well…actually, I don’t want lend money to my relatives for anything, unless it’s bus money out of town. Seriously though…
As Warren Buffet has so famously said, the “time to get greedy is when everyone else is scared. And the time to get scared is when everyone is greedy.” So if we paraphrase Buffet–the time to buy a home is when nobody else wants one. This means that Paulson’s advice is right on! This IS the time to buy a home. I know, I know, there’s a lot of spooky news: falling prices, vacant homes, unemployment, inflation, melting glaciers.
These factors work in a buyer’s favor now. Vacant homes will keep prices low for the next couple of years. So will unemployment. The best inflation protection are real assets such as precious metals and commodities, and especially real property. But you don’t need multiple houses to hedge inflation. One will do nicely, thanks. Just buy one, one that you live in. Make the payments. Paint the bathroom. Make it your own. And if you enjoy it and the payments aren’t killing you, then maybe you can think about buying another. If everyone took Paulson’s advice we’d soon have another real estate bubble on our hands. Of course, Paulson would love to see another one. He’d love to make another killing. So just buy one house. Don’t let Paulson and others like him get richer on your dime.
