In a bear market, investors worry about the value of their investments. Since real estate is one of the most popular investment vehicles, it's understandable why so many people want to know if it's a good time to buy. This article will help provide some insight into that question.

First, it is crucial to understand that the real estate market and the stock market are two different markets. When you buy stocks, you are buying a share of a company's future growth. You have no guarantee that the company's value will increase or decrease but you have every reason to believe that over time it will do well. This growth cannot be guaranteed though, since it all depends on what happens in their respective economies. There are also very strict regulations on who can invest in the stock market. In comparison, when buying real estate you have a guaranteed asset because, unlike the stock market, during inflation, real estate prices tend to increase too so it is clear why some people prefer owning real estate over any other type of investment.

While investing in a single, high-risk stock may pay off big rewards, diversifying your portfolio is key to protecting your wealth. Inflation erodes the value of our money, meaning goods and services cost more over time. This makes houses an excellent hedge against inflation because houses generally hold their value over time, can cash flow, and often provide tax advantages. Even with rising prices due to inflation. High inflation means that people will be looking for products that can store their wealth (aka "liquidity"), such as gold, cryptocurrency, or real estate.

So why buy real estate during inflation? The simplest answer is that it's an asset that retains its value even during inflation periods. That being said, when it comes to housing prices nationally and locally, there are many factors besides inflation to consider besides just property values. From recent history, mortgage rates historically are low even today, compared to the past. You can see this chart above which shows the interest rates going back to 1971 for a traditional 30-year fixed mortgage. Generally speaking, mortgage rates are still at historic lows across all fixed-rate products.

Even though the stock market has had its ups and downs, real estate has historically been a good investment. Furthermore, mortgage rates are still at historically low levels, which makes now an ideal time to buy.

Miami, Florida

1 Vote