The real estate bubble looked attractive when it should have looked dangerous. While it lasted it was used as proof that real estate returns don’t strongly correlate with returns of stocks and other financial investments.

Real estate investment trusts, for example, were supposed to make money despite declines in the popular stock market averages and indexes. That didn’t work out. REITs lost 38 percent in 2008 because of the credit crunch and overly-aggressive expansion plans, reports Kiplinger’s. Profits and dividend got hammered. So real estate won’t necessarily offset other risks when credit problems are harming all investments.

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