JPMorgan Chase is among the latest big bank to join Bank of America and the Fed is reversing the forecast for a recession.
What does it mean for real estate investing? What if they are wrong? How do you invest successfully to navigate the months ahead?
The Impact Of New Optimism
New optimism in the markets alone can create positive momentum in and of itself. Just as fear can cause panic sell offs.
This could help fuel more investing, and drive up asset prices.
This might particularly benefit the higher end of the real estate market and markets that are direct beneficiaries of more capital flowing.
It may also lead to more Fed rate hikes, and even more inflation in general.
This could spur more hiring and affluence in the economy. Though if the fundamentals and capabilities aren’t really there, consumers and businesses cannot ride on the vapor of hopes alone for long.
What If They Are Wrong?
What if we are headed into a recession as many consumers and business owners feel?
This may reverse any short term gains created by a sprint in false confidence.
However, it can also spur a flurry of economic activity in other ways. Including many moving to more affordable apartments, and increased demand for self storage units. As well as the affluent putting their capital into higher end real estate as strategy for wealth preservation.
Optimizing For Bull & Bear Markets
Thankfully, real estate is an ideal asset class for optimizing for the potential for both bull and bear runs.
It can provide concrete assets that won’t go to zero like other sectors. It can benefit from appreciation in upmarkets. As well as passive income. Which can deliver cash flow, regardless of temporary paper value fluctuations.
It can save you from the down side, and provide attractive gains when things are up. All without taking unnecessary risks.
Of course, diversification is also key for optimizing here. The more units you can have a stake in, and of different types, the more consistent your results, and better you can expect to perform when things are tough, or sunny out there.
Major banks have been joining the Fed with headline making predictions that we no longer need to fear a recession.
You may or may not agree with their announcements.
This could in itself create a new upswing in many parts of the economy. Including employment. Though fueling more inflation.
Real estate investors stand to benefit both if they are right, or wrong. It’s all about optimizing your investment portfolio for it.