Where I live there haven't been many down years in real estate. I bought a house for about $120k, it went up to $320k and we had our only down period (which lasted for about 1 1/2 years) and my house went down to about $220k. Since then it's only gone up and is currently at about $520k. So it's never been below what I paid. Easy to make money (when you sell) but hard if you are waiting for a down period. When people flip houses (here) they just find below market houses that need remodeling. The bigger problem now is that I think it's hard to justify those prices if you are looking for rental property. Rents are high but sales prices are even higher. I suspect commercial real estate is the better choice for an investor, in this area at the moment.