Housing Market's Future
Is Open to Interpretation

Question: What do you think of the real-estate market in the wake of the Sept. 11 attacks? Is this a good opportunity to buy?

-- Jun, city not provided

Jun: I always respect people who give an honest opinion, so here's mine: I don't know! Furthermore, I don't think anyone else knows right now, either. Before Sept. 11, the real-estate market was the one bright spot in the economy; it seemed to be continuing to boom. Now, however, that may have changed.

On the positive side is the fact that interest rates are low and declining. This favors investing in real estate and encourages first-time buyers with limited income to purchase homes. But there has been a slowdown in real-estate sales since Sept. 11 that has resulted in price stabilization in some parts of the country. This means that it's now possible to negotiate with sellers over price and terms. In short, the seller's market that we saw in many areas has come to a halt -- at least temporarily.

It's important to understand, however, that a slowdown in price appreciation doesn't mean it's now a buyer's market, or that prices will decline. Rather, the low interest rates noted above and a lack of good alternative investments (most investors are shy of stocks and bonds right now) suggest a continued strong market in real estate -- just not necessarily the boom we've seen in the past. As I said, we're likely to see a more stable market with more modest price appreciation.

On the negative side is the state of the economy. Few economists dispute that we've entered a recession, though many suggest the economic downturn will be short. If that's the case, real estate should weather the storm. But if the recession lingers and deepens, real estate definitely will be affected. Such a situation could lead to a real-estate recession similar to the one seen in the early 1990s.

Quite frankly, all investing involves risk, perhaps now more than ever. However, for my money, real estate, particularly residential homes, presents less risk today than almost any other investment.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Tips and Traps When Renovating Your Home," (McGraw-Hill, 2000).

How to submit your real-estate question: Questions must include your first name and the city where you're located. Send your question by e-mail. Although we can't acknowledge all e-mail, we'll answer as many questions as possible.

Email your comments to rjeditor@dowjones.com.