Will RE hold up this time if stocks tank ???

[Steven Zoernack]

What does everyone think ?  Will commercial real estate hold up this time if stocks tank again or has it all become “risk on”’or “risk off” where all asset classes become correlated ???

[Greg Dickerson]

The stock market and Real Estate market are two very different things and are not correlated. The stock market is and has been artificially propped up by the Fed and Treasury and they will continue to do so. They are buying anything and everything without regard for value or expectation of profits. In fact Powell is on record saying he is not concerned about the loss that could be incurred buying corporate bonds of bankrupt companies. When they buy these instruments it then puts money in the hands of the investors who in turn buy more overpriced assets to then dump back on the Fed.

The Fed is keeping rates low and treasury is buying MBS, CMBS and Bonds which is keeping the real estate market flooded with liquidity. As long as rates remain low and lenders are lending the real estate market will continue to do well. Especially right now when demand is at all time high and inventories are at all time lows. This is average across the board of course as every market is different and you can find the opposite effects in some areas.