Lesson learned: don't apply 1980 Chicago real estate rules to CA property in the 2010s.
Real lesson: don't apply 19XX or 2XXX real estate rules in [location] to [location] property in the 2XXXs.
Buy when you can afford it (after taking into consideration your other goals, like FIRE), you want to buy, you plan to stay put at least 10 years, and it makes sense to do so in your life. Don't buy because you expect prices to continue to appreciate at XX% and hope to make a killing. Maybe you'll get lucky, maybe you wont. But either way, that's what it is: luck. Not skill, not "investing savvy." Luck, pure and simple.
Back in the '70s-'80s, you couldn't sell a place in some areas of NYC, SF, or BOS to save your life. If you'd bought then, you'd have thought you were a genius now. But at the time, there was a
huge malaise about the property market in general, this feeling that it would never go up again. Hahahahahahahahaha. And then there are a whole lot of areas of the country where RE prices stayed pretty flat for years while NY and CA skyrocketed -- as much as we read all these national stories, RE is still very largely local.* But it's the dramatic changes that make the news.
Real estate is one of the few areas where normal individuals can take advantage of leverage. Which is why it can result in comparatively outsized gains: if you have 10% equity in a $300K home, and home prices go up 10%, you have a 100% return. Huzzah! But leverage also magnifies losses. If you have 10% equity in a $300K home, and home prices go down 10%, you now have zero equity; if they drop more, you're now underwater.
One thing I read a while ago that has largely held true in my life is that economic changes make it hard for most people to find themselves lucking into a major housing boom. Most people need jobs and salaries, which often means gravitating to booming areas where there are jobs aplenty. That influx of people often drives housing prices up (certainly in areas where there are constraints on the ability to build more housing to handle those new people). But if those jobs go away, people need to sell and move somewhere else. All of which means that if you are chasing jobs, you are more likely to buy into a market where prices are rising/already high and rising more, and more likely to sell into a market that is dropping. Now, certainly, people in NY and CA will tell me that's crazy, because the housing boom there has been pretty dramatically and consistently rising for a long time. But remember, how much you make depends on both how much you pay and how much you get when you sell. If you're able to hang on for a decade or more, sell in a boom, and then move somewhere
The way to lock in some degree of success in RE, say 90% of the time, is to figure out some way to avoid moving. FI helps. We had to move a couple of times when DH's job went away, including selling in the first tech crash and losing about $100K. OTOH, in the 2008-2009 crash, we didn't need to sell, because our jobs were secure. I have no idea how much value our house lost, because we never had to consider selling -- and however much it went down, it has far more than made up for it since.
Now, we haven't had the huge value swings of some of the other areas. There's no way my house has gained me more than if I'd put the money in VTSAX. But that's ok, because that was never the point. By the time we bought it, we had saved enough that we wouldn't have had to sell it even if one job went away. And it has provided a great place to live and raise our kids, and we hope it will continue to provide a great home base for the next several decades.
*One of my friends is in SF. Several years ago, she was very much stressing about buying a townhome for around $1.3M -- she's sole breadwinner, and even with her excellent salary, the price freaked her out. Several years later when she was unhappy at work, the townhouse was worth $2.4, which gave her an excellent safety net if the shit hit the fan and she needed to sell. Meanwhile, my generic mid-Atlantic, non-DC suburban home might possibly have increased in value by maybe 10% over that 5-8 year period.
