In a previous post, I estimated how real estate performs at various levels of a stock market decline. In my opinion, the sweet spot for real estate outperformance is somewhere between a 15% – 25% stock market decline.

During such a level of decline, mortgage rates tend to fall as investors buy Treasury bonds. As a result, real estate demand increases because affordability increases. Further, during a stock market correction, money tends to flow out of the stock market and into real estate and other more defensive asset classes like bonds.

Once the stock market declines by ~30 – 35%, real estate price appreciation tends to stall as potential buyers rethink their decision to buy any asset, including real estate. After a ~35% decline in the stock market, real estate prices are most likely falling as people fear losing their jobs.

We know that forced lockdowns have hurt the real estate brokerage business as potential buyers aren’t able to visit open houses and transaction volume declines as inventory gets pulled out of the market. However, please don’t confuse the real estate brokerage business with real estate prices.

When the real estate market eventually opens up again, sellers should negotiate for a commission discount while buyers should ask for a commission rebate. The coronavirus pandemic might finally be the catalyst to permanently lower commissions.

In this article, I want to present to you an example of how one property performed during a global pandemic and a lockdown. It’s an interesting example given the final sales price and timeline of the sale. I’ll then share a couple more examples.

When the S&P 500 initially corrected by 10% in 2020, I immediately thought to myself: thank goodness for bonds, cash, and real estate! I had bought a slightly larger home last year with stock proceeds and existing cash.

Bonds were looking fantastic as investors piled into safe havens. At one point, some bond ETFs looked like the famed parabolic internet stocks of 2000. Given real estate is considered a close cousin of bonds, real estate prices were surely rising as well.

However, at some point, investors will stop buying real estate and even bonds out of fear that an economic collapse will take down even the most defensive of assets.

One of those points came on Thursday, March 12 when the S&P 500 declined by 10%, the Vanguard Real Estate ETF VNQ declined by ~10%, municipal bond funds declined by 4 – 6% and even Treasury bonds declined by 1 – 3%. March 12 was a day that wasn’t supposed to happen, but it did.

Let’s have a discussion on how low stocks have to go before they start negatively impacting real estate prices. We’ll talk intuitively about the level of price declines and duration. I’ll also highlight historical price comparisons between the two.

The best time of the year to buy property is when nobody else is looking to buy property. Therefore, the best time of the year to buy property is during the winter months. The rainier, snowier, and colder, the better.

Conversely, the worst time to try and sell property is also during the winter months. Listing your property around the holidays and during the middle of winter signifies desperation.

Savvy buyers know that if a seller wasn’t desperate, the seller could easily wait 3-4 months and list during the Spring when buyers come out in full force.

Back in 2017, I had a very difficult decision to make. My rowdy tenants gave notice and I had to decide whether to sell my rental property or try and find new tenants.

The house had been rented between 2014 – 2017 for $8,200 – $8,800 a month. But when I went to find new tenants at a similar rent in 2017, none were to be found. Instead, I got a couple of offers for only $7,500 a month after 45 days of looking.

Because my tenant situation gave me stress and my son was just born, I really felt that 2017 was a good time to sell. Further, I was running up against the $500,000 tax-free profit exclusion limit.

Earlier, in 2012, I had tried to sell the house for $1.7 million and received zero offers. My agent at the time told me one couple was looking to lowball me at $1.5 million and I told them don’t bother. Fast forward five years, I was able to find my one and only offer for $2.75 million so I took it.

After paying fees, taxes, and the $800,000 mortgage, I was left with about $1,800,000 in proceeds. Over the next 60 days, I invested $600,000 into dividend-paying stocks, $600,000 into CA municipal bonds, $550,000 into real estate crowdfunding, and left ~$50,000 in cash.

So far, the reinvested proceeds have done well. But most of all, the reinvested proceeds have provided a greater amount of passive income with minimal work on my part. I’m extremely thankful I was able to free up time since mid-2017 to be a stay at home dad.

I’m also thankful to the FS community for sharing their thoughts about whether or not to sell back in 2017. After over 1,000 votes, 75% of you said sell, which gave me added confidence to let my once beloved property go.

In this post, I will argue that a golden opportunity to buy real estate is once again upon us. My spidey senses are telling me it’s time to buy at least one property before January 1, 2021.

After I finish telling you why I’m getting bullish on real estate, I’d love for those of you who are bearish to blow my arguments to smithereens.

For most of my post college life, I’ve had a drastically larger exposure to real estate over stocks. I needed a place to live so I figured it was better to pay down a mortgage than to pay someone rent.

When it was time to buy another property, I simply rented out my old place for positive cash flow, and enjoyed my new place until it was time to rent it out again and buy a new place.

I’ve gone through this buy-rent-buy cycle four times now, and it’s been by far the easiest way to make and save several million in tax-advantageous dollars. Within the next five years, our plan is to go through another cycle and buy a Hawaiian beach property and rent out our current San Francisco primary residence.

Now that my exposure to stocks and real estate is slightly more equal after the sale of a SF rental, I’ve had time to think about the two asset classes more objectively. And during this time, I’ve noticed anti-housing crusaders reach deafening levels!

The main reason why there is so much rage against real estate in expensive cities is due to the human condition.