The stock market ended 2018 down, and has been on a wild ride in recent days. So, needless to say, people are getting jittery about investing, particularly in big-ticket items like real estate.
With no end in sight to market volatility, managing that jitteriness is likely to be one of Realtors’ primary responsibilities in the coming months. With that in mind, here are some of the comments real estate professionals shared with Inman that they use to assuage their clients’ fears in uncertain times.
1. ‘Buy more real estate’
Pretty much everyone who spoke to Inman for this story offered this advice in one form or another. Bill Crane — a broker and coach — pointed out that even when stocks fluctuate, real estate tends to be a solid investment that appreciates over time. And even if property values dip temporarily, Crane said he’s personally “never gone wrong buying real estate or advising someone to do so.”
Reminding buyers and sellers of this simple principle can go a long way toward calming nerves when the financial world is blowing up.
“In most cases real estate is something you can purchase now and in a few years make a lot of money on,” Crane added.
2. ‘The banks are basically giving money away’
Rising interest rates were a major story of 2018, but Brad Korn — a Keller Williams agent in Kansas City, Missouri — told Inman that even with recent increases they remain very low compared to historic averages. That means borrowed money is cheap and it remains a good time to get a mortgage.
“Why wouldn’t you finance something you can’t lose your money in,” Korn said. “It’s almost like the stock market doesn’t make any sense when you understand the real estate industry.”
There’s no doubt that interest rate increases are making homeownership more expensive, and potentially contributing to a cooler market. However, putting current rates in context and showing that they are in fact still low may comfort buyers who might fear that they missed the low-cost boat.
“I just can’t justify putting money there when I can put it in real estate,” Korn added. “I don’t think you can go wrong putting all your eggs in the real estate basket.”
3. ‘Money can disappear, but property can’t’
Heather Scott, an agent with Forest Hills Real Estate in Ontario, Canada, said that her great uncle first taught her about the lasting value of property, and today she points out to clients they could live on almost any piece of land. The same can’t be said, however, of stocks.
“You can’t live under a stock certificate if it’s worthless,” she told Inman.
Many of the real estate professionals who spoke to Inman mentioned some variation of this point, noting that real estate is a hard asset that lasts, essentially, forever. Businesses, on the other hand, can go under leaving their stock worthless. As one commenter pointed out Wednesday in the Inman Coast to Coast Facebook group, you “can’t live in your 401k.”
4. ‘Look at these things from a long-term investment perspective’
The stock market’s brutal run in the final months and weeks of 2018 may legitimately have wiped out some wealth for would-be property investors. However, Alison Wisnom, a Realtor with Coldwell Banker in Hawaii, told Inman that she invests in stocks herself and tries to take the long view.
“I’ve been an investor for 20-plus years,” she explained. “I just try to always keep a level head about it and know that it doesn’t matter what my stocks are doing today, they’re long-term investments.”
Wisnom also pointed out that for most people, buying real estate means purchasing a primary residence, and it can be worth reminding them that short-term market swings aren’t something that will directly impact that kind of investment.
The only number that really matters, she said, is the price on the day of the sale.
“It’s not the same as buying an investment property that your going to rent out or flip or generate income from,” she added.
5. ‘You should be diversified’
Deric Rangell, owner of Sentinel Realty Partners in Los Angeles, said that the people who are worried about the stock market fluctuations may actually need to diversify their investments. And that means they could need more real estate.
“The day to day gyrations of the stock market have little impact on real estate,” he told Inman. “You should be diversified because real estate is still appreciating even in the face of headwinds.”
Rangell also noted that many people have no company-sponsored retirement plans, and leaving their cash in the bank means constantly losing money to inflation. His point was that real estate remains a good asset for building a diversified portfolio that can withstand the caprice of the financial markets.
“You need to ask the question if people are invested in real estate,” he added.
6. ‘If you’re ready now, invest now’
Scott, the agent from Ontario, said that while Realtors don’t have a crystal ball predicting the future she doesn’t advise people to wait for the the next perfect moment to jump into the real estate market. The current financial atmosphere is a good illustration of this principle: The stock market is volatile but interest rates are expected to keep rising. Meanwhile, more and more people need homes as millennials and Generation Z come of age.
So should clients try and time their deals to coincide with market fluctuations? Scott doesn’t think so.
“It might be better, but it could also be worse in the future,” she said. “I do think prices will stay strong. Demand will still increase.”