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By historical matrix, US stock market Overwalld is– So put it lightly. S&P 500 price/earnings (p/e) ratio is 28.75 At the time of this writing, compared to an average of 20.28 from 1970 to date. “Buffett indicator,” or the total stock market value of a country for its total GDP is currently the ratio. 207.7%100% -136% compared to a healthy number in the range.
And it says nothing about unexpected trade policies in Washington Now!, Are investors Grone decent Above Tariff policiesInflation risk, and risk of recession.
Stock market accidents are part of market economics. There is no question, but when, the next stock market accident will be hit.
As a real estate investor, it raises an important question: how much does you like the real estate investment from the stock market crash? It goes there There are many answers to that question.
Improvement
Sometimes, stock investor Now! Languages Increase in prices Very high. The market then gets correct, with prices declines to the proper level by the company’s revenue and estimates.
This does not hurt real estate investors. This is healthy and normal in any market, where prices are determined that buyers and sellers are ready to accept what.
Geopolitic risk
Geophysical risk seems to be higher than normal. Many hot wars continue, America recently bombed a colleague To Russia and China, and foreign policy out of the White House feel unexpected.
Stock market response Badly For geopolitical events. They do not necessarily crash in bear markets, but send news of wars, air strikes, diplomatic tension and business wars to cover all stock investors for covering.
While real estate is not present in a vacuum, it is far more local than shares. Local property price and revenue Are based On local market conditions, half the world is overcome instead of conflict that can supply supply, but will not keep local workers out of their jobs. This makes most real estate investment much untouched by geopolitical risk.
How to read this idea practice If a new world war happens, real estate will perform Today broke.
Risk of recession: income
The recession hurt trade income and real estate income equally.
In the recession, consumers spend less, earn less business, and they cut workers or freeze the recruitment. On the residential side, He High rental omission, turnover rates and vacancy rates, And More domestic bundling (adults are moving together instead of living independently).
But commercial The side, the same thing is with the office and industrial tenants.
Nevertheless, rental income does not disappear. The rent may take a little dip, and the landlords may have to offer more concessions. But for real estate income, such as anyone who retired on retired and professional investors, they will still gather it.
there are also Abundance Recession-Real Estate Investment Out from there, Every month, I invest as a member of a cum-jaan club, Who Is Keep an eye on Recession-flexible investment in the last one year.
Stock investors will see less or stopped dividends. But where I am In fact victim Is in Prices, especially among the retired people who rely on selling stocks to pay their bills.
Recession Risk: Prices
Going back in 1957, S&P 500 declines 31% In Last 10 recession.
Conversely, house prices do not necessarily fall into a recession. Four of the last six recession In fact saw House prices hikeAnd when the reit crashes in the recession, they too Reversal before other asset prices,
So why is real estate so much better than shares in recession?
Because in recession, the Federal Reserve cuts interest rates to make the economy juice. And it makes both residential and commercial real estate more affordable, so Buyers Can and can do Offer high prices.
Commercial real estate prices Are based But Cap rateThose who run near the lockstep with interest rates. When interest rates and Cap Rates fall, property value increases.
As a passive real estate investor with partial ownership in over 3,500 units, the recession does not keep me at night. I Worry More about the risk of continuous high interest rates So inflation.
Inflation risk
Inflation is a mixed bag for real estate investors.
On the one hand, it runs nominal property values and rent. For investors with long-term fixed-onion debt, this is all opposite. Monthly loan payment is fixed in the dollar of Yesteeryear, while the fare and value shoot through the roof. He works out especially Good for residential investors One-to-unit properties,
The negative side is that the Federal Reserve increases interest rates to combat inflation. It sends the cap rates higher, which means low property value for commercial real estate.
Not all commercial assets are suffering. Long-term, properties with fixed-onion loans can enjoy high cash flow from increasing fare. They do not need to sell while the cap rates are high; They can wait for a better seller’s market.
The problem is that many commercial real estate investors use short-term, floating-onion loans. When we invest together in our co-in-charge club, we pay full attention to the operator’s loan terms. We want to see a lot of runways for operators to rake high fare for operators during the period of inflation without forcing them to sell or refinance in a high-onion market.
For shares, they do not perform with immovable property during the period of inflation. But They of course Do better than Bond. In the increasing inflation period, Real Estate has made average comeback 10.6%7.3% for global equity and 0.5% for treasury bonds.
Tiring risk
The recession alone does not crush real estate investors. Nor not only inflation alone. The most scary risk for real estate investors comes from stagflation, A weak economy, Combining with high inflation.
In the time of stagflation, central banks Caught Between the recession rock and the difficult space of inflation. If they cut interest rates, it can help the economy jump, but it can also increase inflation. The opposite is if they raise interest rates.
I am most concerned about Trump’s tariff: they both hurt the economy and increase inflation.
So far, the US economy has proved flexible due to policy changes Out of DC I do not know how to perform stock and real estate in the next few years. But I stopped trying to predict the future.
Today, I practice Dollar average with my real estate And stock investment. Every week, my Roboadvisor gets out of money My bank account to invest Automatically for me, Every month, I invest $ 5,000 in a new passive real estate investment through the co-investment club.
The stock market rises, Stock market drops down. I can worry about my stock Portfolio’s gyre As I Come close Retirement, but for now, I Have fun Inactive income from private notes, real estate syndication and funds.
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