When I heard about the stock market nose dive last Friday, my first thought was with my clients who liquidated some stocks the previous Monday to close on a ski in/ski out condo at Park City Village. They look like geniuses today.
My husband and I met with our investment advisor yesterday. We set up the meeting over a week ago. Greg has always been very honest about market volatility and told us that unless we have a 3-year time horizon, we should not be in the market. I think the same applies to real estate investments.
As I write this blog, no one knows whether recent stock market volatility is simply a market correction or the first sign of deeper economic trouble. I definitely learned some lessons from the 2008 economic downturn. These lessons have positioned my family and my business in a much better place than we were in 2008.
Real Estate Lessons Learned from 2008 Economic Downturn
- It’s not good to be too leveraged. The less you owe, the better your position to wait out a downturn.
- It’s safer to buy and sell real estate at the same time. If you buy and sell at the same time, you will minimize the risk of buying high and selling low.
- Real estate is perceived as a safer investment when stocks are volatile. When economies are unstable, people like to invest in things they can touch and see, like real estate and gold, creating a demand for certain properties.
- Interest rates tend to go down when stocks go down and the bond market rises. This makes investing during a downturn even more cost effective.
- Stabilizing property values and lower interest rates could create the best opportunity for buyers since 2011. Interest rates are at 3-month lows this week. What a great time to lock in a loan.
- Pigs get fat and hogs get slaughtered. You are smart enough to figure this one out.