<!– /* Font Definitions */ @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Verdana; panose-1:2 11 6 4 3 5 4 4 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1593833729 1073750107 16 0 415 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:”"; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:”Times New Roman”;} h1 {mso-style-unhide:no; mso-style-qformat:yes; mso-style-link:”Heading 1 Char”; mso-style-next:Normal; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; page-break-after:avoid; mso-outline-level:1; font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-font-kerning:0pt;} span.Heading1Char {mso-style-name:”Heading 1 Char”; mso-style-unhide:no; mso-style-locked:yes; mso-style-link:”Heading 1″; mso-ansi-font-size:11.0pt; mso-bidi-font-size:12.0pt; font-family:”Verdana”,”sans-serif”; mso-ascii-font-family:Verdana; mso-hansi-font-family:Verdana; font-weight:bold;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} –> Much like the equity markets, real estate investors are constantly digesting real estate trends, mortgage trends, community development trends and attempting to read the trajectory of the real estate recovery. It seems like everywhere you turn, there is one more piece of insightful feedback supporting one more theory.

The shape of the recovery may well influence your investment strategy. The most common debate evolves around whether the recovery will be V-shaped or W-shaped. The V shape would indicate that 2009 and 2010 will be good times to invest. A W-shaped recovery suggests a prolonged period of opportunity and a buy and hold pattern of investment.

Steve Horne, CEO of the loan modification firm Wingspan Portfolio Advisors, says; “I am a firm prophet of the W-shaped recovery. Housing is going top go down again in the first quarter of 2010. The healing won’t begin until all these non-performing loans start trading in earnest, until we get borrowers back on their feet.”

Horne just may be right. “A lot depends on how long the government keeps its buying up. Rates are still at all-time lows, but once the buying stops, we’re going to come to a pretty hard stop. We are likely to see a much smaller mortgage market after the second quarter and later in 2010.”

As the economy shows signs of stabilization, the government is expected to pull back from the infusion of more funding. The continued government investment in toxic assets is considered inflationary. This will mean that banks must dispose of the assets and incur substantial losses. The result is likely to be further setbacks to market values.

Only when this shadow inventory is cleared out can investors expect to see prices begin to rise. However, equity markets have performed similarly. And, equities have surged more than 40% in 2009. Thus, the appearance of the W-shaped recovery gains credence. No one has ever doubted that successful investing includes being in the right place at the right time.