In September 2002, you could have bought shares of Corning Incorporated (GLW), a maker of LCD screens, fiber optics and the like, for $1.60 per share. By 2005, share prices would have soared to over $20. Even if you didn’t sell then, shares are almost $19 today.

Why the big move? To buy at such a low price, you would have had to buy at the exact bottom of the tech bust. You would have had to step in and buy shares when anything tech was being sold off. Corning also made real products, unlike many companies during the tech boom, and demand for their products has continued to grow.

Buying during tough times (what Sir John Templeton called “the point of maximum pessimism”) reaps substantial rewards. That doesn’t mean to buy every burst bubble though. You still have to do your homework, identify the survivors, and have the patience and emotional fortitude to wait for the crowd to come back.

But that’s the ultimate payoff of being contrarian and buying when there’s true value afoot. You essentially make your money when you buy.

Right now, the one market that most fits the bill for pessimism is housing. Nationwide housing prices are moving downward again.

Lending standards remain incredibly tight after years of staying incredibly loose. In some states, the backlog of foreclosures could take years to unwind.

There are some optimistic signs too: Foreign buyers are scooping up comparatively cheaper properties in the United States. Price-to-rent ratios in some markets make owning more compelling than renting, even before taking into consideration the tax benefits of home ownership.

Real estate is definitely worth a closer look right now.

Here are three key things to bear in mind though:

• Location still matters. Oceanfront property selling for half of its peak price beats out a run-down home in a half-foreclosed neighborhood selling for half its peak price. Beyond specific neighborhoods, some areas are growing and some are contracting. A $200,000 condo in California may be more expensive than a $100 home in Detroit, but, honestly, where do people prefer to live?

• Income is the key. While the focus on real estate during the bubble was on price appreciation, the real secret to success in real estate has always been positive monthly cash flow after paying everything else.

• The real returns come from physical ownership, not paper assets. It’s an odd disconnect: Real estate prices have remained weak for several years, but most major Real Estate Investment Trusts (REITs) have bounced heavily off their March 2009 lows. Investors looking to profit in real estate today can get better cash returns from buying and renting an actual property than buying REITs themselves.

That’s not to say you should completely ignore REITs and become a landlord. For investors who need liquidity, the dividend yield on REITs is still substantially better than most common stocks, and REITs can invest in properties that individual investors might not have the knowledge to invest in, such as industrial and commercial properties.

Either way, most of the news about real estate is ugly. That should be your first clue that there may be some opportunities in there.