Turmoil leads to peril as well as opportunity. Today's falling home prices signal a bargain, which may lead you to wonder whether and how to capitalize on this opportunity. With today's low prices and interest rates, now is a great time to review your options.

Truly, this is a buyer's market—-maybe the best of our lives. Several trends suggest that these are ideal circumstances for potential home buyers: First, this is a badly distressed real estate market. Prices on everything—houses, condos, and apartments—are way down.

Prices are driven by multiple factors, but substitution is a powerful one. That's why appraisers use comparable homes, or "comps," to estimate value. Even brand-new property is affected by the falling price of existing homes. Simply put, all prices fall in a slump, even luxury or vacation properties.

Construction costs rise over time, and that affects the substitution factor. Location is very important, as is consumer demand. Housing styles go in and out of favor, as do regions and neighborhoods. Despite these variables, one thing seems likely: Property will be worth more over the long haul than it is today.

Think about your current home. Maybe you paid $300,000 for it, and it's similar to most others in the neighborhood. Along comes this recession, and housing prices fall. You're distressed to discover that your house is now worth $275,000. We lost $25,000! screams your inner voice, and maybe your outer voice too.

But wait. That same thing happened to every other house. Does it really matter, when all prices reflect that same adjustment? Sure, if you sold today, you'd get less than what you paid. But, since the same thing happened everywhere, you'll also pay less for a different—and maybe better—home.

If you are prepared to buy a new home, don't use cash. There are several reasons for this, but the strongest is that it negates one of real estate's top attributes: Leverage. The business combination of tax-favored interest and "other people's money" is hard to ignore. Borrow because it makes solid financial sense to do so.

Real estate by itself tends to appreciate at a slow and steady pace. If you pay cash, you end up having much of your wealth tied up in illiquid assets growing at a slow rate. And assuming that you have cash in the first place, you could invest it more productively. Why deplete productive investments?

Of course, debt opens a door that swings both ways. Great fortunes have been made with debt, but more than a few have been lost too. Borrow conservatively, and make sure that you will have sufficient income to meet required payments. In other words: Use debt wisely.

Wisely used debt magnifies wealth-building potential. It's like using a lever to move a boulder; a little shove gets a lot of results. In this way, real estate's conservative loans can help build a lot of wealth.

The author is principal/CEO of Family Investment Center, a commission-free investment firm in St. Joseph, Missouri. The ideas expressed in this column are his alone and do not represent the views of Medical Economics. If you have a comment or a topic you'd like to see covered here, please e-mail meinvestment@advanstar.com.