Stocks Enter "Bear Market". What about the Real Estate Market?

Within the last few days, we have seen the stock market enter a “bear market” as several stock points sink. Similarly, we have seen inflation on the rise for several months now. What does this mean for real estate and should you be concerned? Our short answer is no.

What is a bear market?

The term “bear market” refers to a period where the market experiences prolonged price declines. In most cases, a bear market is when securities prices decrease by 20% or more from their recent highs. This decline in market value usually stems from widespread pessimism among consumers and investors and generally negative sentiment among investors. While stock prices may decrease, this rarely directly impacts the housing market. Whether they’re buying or renting, people still need homes, and businesses still need spaces to operate in during a bear market. This makes real estate investing a viable option for investors who want to stay active during a bear market.

How does inflation affect real estate?

Rising inflation means prices are increasing across the board, which includes goods, services, housing costs, and more. When you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increases on one of your biggest budgetary items each month.

If you’re a renter, you don’t have that same benefit, and you aren’t protected from these increases, especially as rents rise.

Are we facing a market crash?

At this moment, experts say we are not headed towards a market crash. Regardless, with so much uncertainty facing the market and the near-term future, it can be tempting to get paralyzed into doing absolutely nothing at all. While staying the course is usually a great strategy when it comes to taking part in any recovery that follows a crash, you have to have the right financial foundation in place. Now is the time to assess your liquidity and holdings.

Buying a property is a powerful decision. It’s no wonder why so many people view it as the best long-term investment, even when inflation is high. When you buy, you help shield yourself from increases in your housing costs and you own an asset that typically gains value with time. Investing in real estate offers inherent value via equity and “value-add” through tenancy. As an asset, real estate is both protectable and reasonably easy to liquidate. Real estate is a tangible and usable investment with historically strong resiliency and mitigated risk.

The Hyde Real Estate Group consist of financially literate professionals focused on providing top-tier service through real estate acquisition and sales. Allow us to guide you through the Greater Las Vegas market to succeed in the residential, multifamily, or commercial sectors. Reach out to us to get started on your investment journey in the Las Vegas area.