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Although my answer is Yes - Residential real estate will have some more bumps. One problem not mentioned is that - Yes jobs are being created, but almost all of those jobs pay less than what those same jobs did 2 years ago. A job that paid $50,000 in 2008 pays $44,000 in 2011. A second job in the family that was, for example, a $36,000 reception/secretary is now a $31,000 reception/secretary. There are too many people out there who want work - supply and demand rules - and they will take jobs with fewer dollars and benefits just to get back into the job market. That will not change for at least 12-24 months.

These new jobs are not creating discretionary income and very few of the new jobholders will be potential buyers in the depressed housing market. They will be busy buying essentials and trying to dig out of the massive financial hole created by the job loss. That plus the fact that the underwriting pendulum has gone to super conservative keeping many potential buyers who can pay the mortgage debt out of the market. That too will slowly need to change.

The large "if" that may make the real answer to the question No is the spending issue facing local, state and the federal government. If our elected officials cannot address this issue over the next 2-3 years, today's cash investors in residential real estate will be wishing that they had waited until 2013 and 2014 to buy. The residential real estate worm will turn; the question now is when.

I have a nice bridge in Brooklyn that I would like to sell someone.

Haven't you been keeping up with the news? It's never going to be a good time invest in real estate, prices are going down forever. Leave investing to the professionals, be happy renting your dump from them.

I sold my home a few years ago. I think investing in real estate is good, and now is a good time to be buying into a general segment, but you can find deals in both up and down markets. For personal investments renting is the way to go. We've saved $20,000+ year over year since selling our home and renting. Budget is more stable, and our saving is generating compounding of interest our home did not. It just sucked us dry with repairs and updates.

Overall, this is an excellent time to buy. Prices are way down, even in stronger markets. The decision to buy is better if you are going to own/occupy. First, you get to live in the property and not pay rent. Second, the downside potential is minimal given the large corrections to date. Third, if you finance, your buying amplified upside potential due to the leveraging factor. Folks paying all-cash are also making a smart move now. I'm investing in real estate on my own account. I cashed-out of my last home with a big upside gain during the "tax credit" bump last winter. Now I'm getting back in with a great deal on a smaller place that better fits my lifestyle now. You gotta live somewhere.

Yes/No is too simplistic a choice.
Location and local economy are VERY important.
For instance, anybody want to buy a house in Detroit?

Residential real estate is affected negatively by the fact the boomers are getting old, and will likely downsize in later years. Small houses, condos, and apt buildings may be a good buy. McMansions are not. They will continue to tank.

Commercial real estate has bright spots - there are some real buys out there. There are also properties you couldn't give me free.

All in all, I'll stick to Commercial.