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These are trying times for those who need to buy, sell or invest in real estate. Is now the right time to get into or out of real estate ownership? Does the market still have farther to fall? Can I make money if I invest now?

The real estate investor's very first rule of success is do not invest in a market where prices are falling. You can do that in the stock market because you can profit by short selling. I know of no equivalent tactic in real estate.

The second rule is to understand how to identify the bottom of the market. Surprise! The only way you will be able to identify the bottom of the real estate market is after it happens!

Yes, I know, there is just so much "bargain" property being offered for sale that you feel like a fool for not grabbing some. When a bubble bursts it scatters confusion over the landscape. Confusion is what's infesting property values today.

At the top of the real estate bubble some poor soul paid $450,000 for a very ordinary home. Now, during a major market adjustment with few buyers, that desperate owner has dropped the selling price to $300,000. Wow, what a steal, right?

The truth is we won't really know the true value of that home until a few months after the market hits bottom. Buy it now for $300,000 and run the risk of it losing another $50,000 in value over the next eight months.

A recovery of real estate values will be delayed by the financial mess that has been created by the U.S. government. For the last 15 years our political leaders have been promoting an environment where almost anyone could buy a home. Whether they could afford that home was a question never asked.

Wall Street's investment bankers jumped on that opportunity and packaged collections of shaky mortgages into packages they called "securities" and sold them for fat profits to financial institutions around the world. Your pension fund may own some of that junk.

Congress continues to spend more than it collects in taxes, so the country runs on money borrowed from China and Japan. How long can that last? As this is written one presidential candidate is promising to raise taxes. If the government would cut spending at the same time there might be reason for hope. No one inside the beltway seems to be advocating less spending.

More taxes will mean consumers will have fewer dollars available to qualify for mortgage loans. At some point soon the Federal Reserve must raise interest rates to hold off the inflation that is beginning to eat into the earnings and savings of every U.S. citizen. Higher rates will prevent tens of thousands of potential home buyers from being able to afford mortgage loans.

We won't ever mention the problems being created by The Federal Reserve's panic to try and save the economy by pumping billions of tax dollars into failing investment banks and mortgage lenders. In addition they are insisting that mortgage lending requirements be tightened. A good idea, but there go a few more tens of thousands who won't be able to get a real estate loan.

Another negative signal for real estate is the number of real estate agents canceling their memberships in multiple listing services and failing to renew their state licenses.

Yes, Virginia, the real estate market will find a bottom, and that bottom will be easily recognizable.... about six months after it occurs!