Here’s a great example of faulty one to one, single variable logic:

U.S. commercial real estate yields are near the highest level relative to Treasury bonds on record, a signal to some investors it’s time to buy property. – Bloomberg News

Simplistic single variable analysis, while it presents a neat and tidy Go vs. No Go answer, is something I really dislike when it comes to investing in anything — particularly real estate — because it does not take into account the entire picture. In this case, it ignores multiple variables, and in particular, whether or not the purchase price of U.S. commercial real estate will be worth what you paid for it next year, or the next decade, if you decide to sell. Much like buying a dividend paying stock for the yield, you also have to consider if you can sell that stock back at or above the price you paid for it.

That is why successful long term investing in nearly every asset class I can imagine, should be a multivariable decision making process where many variables must be taken into account.

If you disagree, I would encourage you to listen to Reggie Middleton’s analysis of the current real estate market and why he believes real estate still has a long way to fall.

Best (paraphrased) highlight:

Simply looking at [real estate] yields compared to U.S. Treasuries, does not give you the full fundamental picture. This also negates the fact that … the U.S. Government is buying Treasury Bonds to artificially suppress interest rates [and stimulate real estate investing]. That by definition, is not sustainable.

Reggie Middleton’s Boom Bust Blog is one of the best real estate investment blogs around, and it would be wise to listen to successful investors like him versus the usual shills hyping their wares.