I just read an article in the new issue of "Money" magazine about a professional couple who took an early retirement, planning to invest most of their savings in Florida real estate. They were experienced at flipping (buying, remodeling, and selling) and bought two houses in 2005, ready to add to their retirement income. Unfortunately, they were caught in the downturn of the Florida real estate market, and find their nest egg disappearing while they carry the payments on these unsalable properties.
My niece Linda and her husband, Dale, were nearly caught in this same trap when they bought two investment condos near their Florida home just before the bubble burst...but they are among the lucky ones. One unit was still in the construction phase, and they were able to cancel the sale. The second is rented.
Could this ever happen here in the Bay area? I tell my clients that I threw my crystal ball away years ago, but maybe this is a cop-out. Bubbles don't seem to burst around here, but we've certainly seen slowdowns in the market when inventory grows and the balloon slowly deflates.
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