None of this is to say that markets don’t crash. History has shown us they do. But crashes pass and markets bounce back—especially real estate. The 2008 housing crisis, though terrible, was temporary. The market rebounded by 2012 , and home values soared to new heights up through the 2020s. Even if the current high interest rates cause a dip in the housing market, we know from history that the losses won’t last forever.
Plus, there are multiple ways to access stable investments via commercial real estate and mitigate risks associated with a particular category. For instance, while office buildings lost value during Covid-19 due to shelter-in-place orders, demand for industrial warehouses skyrocketed. Vacancy rates for industrial properties dropped to an all-time low in 2021 while prices hit an all-time high. A diverse portfolio with investments across multiple asset types should help stave off category-specific losses.
If you’re worried about the housing market crashing or a potential recession, you’ll be relieved to know that similar to lower-yield investments like bonds and money-market funds, some commercial real estate investments can act as a safe haven during an economic downturn. Need-based assets like assisted-living facilities and medical offices are considered highly secure and recession-resistant because demand for them doesn’t decrease during economic downturns. Considering that the amount of retirees in America is projected to more than double by 2040, likely leading to a boom in demand, now might be the exact right time to invest in real estate, recession or not.
Author: Connect Invest
July 28, 2022
