For the moment, it looks like buying the S&P 500 below 2,400 was a shrewd move. The S&P 500 got down to about 2,237 before aggressively rebounding higher. Every investor can easily sell the stock they bought between 2,237 – 2,400 today for a 17% – 30% gain. Whether you do so or not is up to you.

When the S&P 500 was at 2,400 and below, the Doomers came out of the woodwork to warn us all that the world would enter a zombie apocalypse. They, along with politicians and the media, said that millions of people would die from the coronavirus. As a result, many predicted the S&P 500 would fall to 1,000 and the Dow would fall to 10,000.

Thankfully, social distancing and lockdown measures have helped tremendously and the Federal Reserve and the government launched massive stimulus plans to save us all. Thankfully, the models were nowhere close to correct.

With tens of millions unemployed, the government announced an extra $600/week in unemployment benefits. Earning $4,000 – $5,000 a month per person should be enough for one person to survive, especially given all the backlash I got in my budget posts.

With stimulus checks and more PPP money being dispersed, the government is attempting to ensure a vast portion of the economy survives until the lockdowns end. So far, the government is doing an admirable job pumping out the cash.

As the stock market recovers, the time to find real estate deals is now. If you believe in a measurable recovery in 3Q, then we only have a small window before the most frightened real estate sellers realize the world is not coming to an end.

Physical real estate is my second favorite asset class to build wealth. Online real estate is my first. Unfortunately, owning physical real estate can be a royal pain due to never-ending maintenance issues. You can buy new construction and I guarantee you there will be problems that need addressing within several years.

After inspecting hundreds of houses and buying and selling multiple properties over the years, let me share with you some sneaky tricks sellers deploy to make a house look better than it really is as well as some warning signs to be aware of.

With the coronavirus pandemic raging on and a very dismal economic outlook when record-high unemployment, buyers need to be more careful than ever. There are opportunities to be had, despite the big decline in inventory. You just have to patiently search.

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 for safety. 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. However, I do think a great listing agent is incredibly valuable for getting too dollar.

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 several more real estate outperformance examples, including one that closed more than two months into a lockdown.

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.