Investors are scooping up Fresno real estate like nuts at a Super Bowl party, but that didn't stop a Federal Reserve official from calling residential housing a lousy investment.

According to the Wall Street Journal, Karen Pence, who runs the Federal Reserve's household and real estate finance research group, said recently that houses aren't a good investment because they can't be sold quickly like stocks and bonds; aren't a diversified investment; carry expensive transaction costs; and have values too closely tied to the job market.

But does all that lead to the conclusion that homes are a lousy investment?

Not according to veteran real estate agents. First off, they note that stock transactions carry fees, and they don't buy the notion that stock performance isn't tied to the job market.

It's true that home buyers should consider their residence as shelter first, but longtime Fresno real estate agent Ken Neufeld points out that - except for families who made their purchases right before the recent crash - thousand of homeowners live in houses that are worth more than they paid for them, or they have substantial amounts of equity.

"And people who buy today will be very happy," he said, suggesting that values will trend upward.

New data supports that: Clear Capital of Truckee, which uses repeat transactions of the same homes to determine trends, says prices bottomed out in Fresno last spring.
Quarter-over-quarter prices are essentially flat, and the 11% dip in values between December 2008 and Dec. 24, 2009, was the smallest year-over-year decline since 2007, said Alex Villacorta, senior statistician.

Investors are paying $50,000 for two-bedroom houses in Fresno, renting them out for $750 per month and enjoying strong cash flow. "I've got one client who says that $50,000 house will be worth $80,000 three years from now," Neufeld said. "Tell me why that isn't good."