Could someone explain to me why this is a bad idea?

Now might not be the best time to do this -- the prices of houses are very, very high, and there is some indication that it might be a bubble set to pop. If you buy a house the standard way -- mortgage, interest rates -- it usually evens out, because part of the reason house prices are so high is that interest rates are so low. People only really care about their monthly payments.

If interest rates are out of the equation, you're paying more than the house is "worth." (Quotes 'cause that's so imprecise. The "worth" of the house has a lot to do with what comparable houses are selling for. We have a really weird house that doesn't compare very well to existing houses. The appraiser decided it was worth what we paid for it. I asked how that was determined, and it was basically because we were willing to pay that much for it and the appraiser didn't notice anything that would greatly increase or decrease the value. So it's a bit circular -- it's worth what you're willing to pay.)

OK all of that is conjecture and not my area of expertise, but that's the impressions I got after my big house-hunting and -buying experience last year.

Campbell says investment fundamentals always apply -- diversify your portfolio. Just as your portfolio shouldn't have been top heavy with dot com stocks in the 1990s, it shouldn't be housing heavy now. And when it comes to real estate you'd better be in it for the long haul. The down periods can last just as long as the up sessions.

Investors and prospective investors, especially rookies, should pay close attention to a primary set of indicators that can give some early warning signs of a pending downturn.

"Every month, follow a publication or publications to get the five key indicators. Start logging them. Use a spreadsheet to chart them. One or two months doesn't make a trend. Trends develop over the long term. Create a graph and start seeing them go up and down. This is not what I think. This is what the market tells me," Campbell says.

Campbell says the key indicators to watch are:

Interest Rates. Rising interest rates have a depressing effect on real estate prices. Falling rates help generate demand. That boosts prices.
Building Permits. When demand is strong, builders pull more building permits so they can build and sell homes. Unwilling to be stuck with homes they can't sell in a softer market, builders reduce the number of permits when demand drops.
Home Sales. Simple principles of supply and demand affect home sales. When buyers buy, prices rise. When buyers retreat so do prices.
Loan Defaults. Defaulting home owners are having job or money troubles or both. That signals a weakening economy.
Foreclosure Sales. Foreclosures signal even deeper consumer money troubles and a worsening economy. It also signals dropping home prices.
Income levels are also key. If they don't keep pace with the cost of housing, buying a home to live in, let alone second homes, becomes more and more difficult.

"The biggest determinant, if you go back 60 years is that ultimately housing tracks with income. What doesn't track with income?" he asked.