Before you buy real estate, you should make an effort to evaluate trends. Constantly read your local newspaper to track real estate price trends, and keep a close eye on national financial news to look for broad issues such as interest rates, which could have an impact on the housing market as a whole. When buying stocks, there is a saying, "the time to buy is when there is blood on the street". Basically, you need to get in when others are getting out. Look at what everyone else is doing then do the opposite.

     In a down market, prices are dropping, and there are probably lots of foreclosures. It sounds awful, but one way to make money is from other people's difficulties. A glut of houses for sale and foreclsures increases the supply, and negative coverage from the media will probably cause demand to drop. That translates into lower prices. Also, if foreclosures are increasingly rapidly, there will be a huge demand for rental units. If you own these, all the better for you.

     In summary, don't be a sheep who is caught up in a mob mentality. If everyone is doing one thing, then there is probably an even better option that is being ignored, and can be profitable. Use any real estate downturn as an opportunity to stock up on property. Do you want to buy low and sell high, or buy high and sell low? The decision seems pretty simple to me.