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Covid-19, in a matter of weeks, has transformed our lives as we know it

It’s impacted our social norms, healthcare systems, personal investments (401K and retirement pensions), and the way we work.

With the global markets essentially closed, companies across all industries and sectors have been struggling to stay afloat due to cash flow issues as a result of decreased revenues meaning some businesses will be forced to lay off its employees. More, the stock price of companies that are publicly traded is plummeting.

The real estate sector will more than likely be negatively impacted as well but it’s way too early to tell you to what extent. That said, with the level volatility in the equity markets, particularly in these times, I’d rather own a piece of real estate than stock.

Recessions and Real Estate

If you’re in a position to continue to hold on your real estate investments, meaning that you’ve got enough cash to weather this storm, then I’d hold. According to the Freddie Mac Home Price Index data from 1975 to 2019, real estate values have continued to rise through periods of recession—the only exception is the period between 2007 to 2011

Mark Fleming, chief economist for First American Financial Corporation, a provider of title insurance, settlement services and risk solutions for real estate transactions, believes that the housing market may be able to weather the Coronavirus impact better than the 2008-2009 recession. Fleming says, “This time, housing is a casualty of a public health crisis turned economic, not the cause of an economic crisis.”

He also points out that the key differences between the pre-Great Recession housing market and the housing market during the coronavirus outbreak is:

• The housing market is not overvalued;
• The housing market is underbuilt;
• Equity is at historical highs.

The bottom line is a real estate investment provides you with a level of security that an equity investment like a stock can never provide.

Now Is The Time To Invest In Real Estate 

In moments of crisis coupled with the fear of the unknown, people react impulsively.

And if they’re strapped for cash they’ll start liquidating their assets starting off with selling off their stock investments, emptying out their bank accounts, and, eventually, if they still have a need for cash, people will start selling off their real estate holdings.

Right now, cash is king and if you’re sitting on a surplus of cash then I’d urge you to take advantage of some of the real estate opportunities at home and abroad.

Further, with central banks worldwide reducing interest rates to stimulate the economy in their countries, mortgage rates around the world are at historic lows.

If there was ever a time to invest in real estate for investment or personal use, the time is now. I’m not sure if we’ll ever see conditions like we’re seeing today ever again. At the end of the day, everyone needs a place to stay whether it’s their personal residence or an AirBnb rental for their vacation.

You and I both know that this Corona thing will eventually pass. The question is… how will you be positioned once it does?

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