Historical excerpts from the late 1990s show that real estate prices are expected to witness a dramatic increase, following a severe financial crisis, and safe haven assets like Bitcoin, silver, and gold are likely to follow the trend.
The real estate market across the globe is in a crisis following rising unemployment rates, debts and plunging stock markets, in light of the unprecedented COVID-19 outbreak. In the US, housing sales have witnessed a sharp fall, plunging to nine-year-lows as real estate owners continue to default on their mortgage payments.
How post-COVID-19 period looks for real estate
Experts now forecast that a massive sell-off wave will hit the global real estate industry in the second quarter of 2020. As already seen, the US, Japan, Singapore, and Korea are struggling to cope with a severe shortfall in demand as the industry eagerly awaits some frenzied buying activity.
Makati in the Philippines, a densely-populated region and a thriving real estate market, saw housing prices hit all-time highs in the past few years. However, following the pandemic crisis, it, too, declined by 15 percent. The figure is likely to plunge by 20 percent by year-end.
Yes, the year 2020 paints a rather dismal picture for the real estate market all over the globe. However, if history has taught us anything, it is that it repeats itself. Much like the previous times, the housing market will see a sharp increase in demand in the long term and recover its losses.
Real estate will boom, and so will Bitcoin, experts claim
Joint research conducted by the University of Granada and Federal Reserve Bank of Chicago reveals that many countries, during the late 1990s and 2007, saw a significant rise in housing demand.
These events are often named among the primary catalysts of the global financial crisis as an increase in the bank lending capacity fundamentally changes the whole market dynamics, the report read. Despite the turmoil, the real estate market witnessed soaring demands for a prolonged period.
One of the primary reasons behind this surge is the fall in interest rates that encourage even small-time buyers to make the most of the opportunity and invest in a rarely-seen cheap housing market.
The second catalyst is often prompted by the government’s efforts in softening the blow on the economy through various stimulus packages and relief efforts. The influx of trillions of dollars in cash results in an increased appetite for housing purchases.
In the current context, the US government is under tremendous pressure to mitigate the impact of the pandemic outbreak, offer financial support to those affected, and help businesses recover their massive losses. Amid these gloomy predictions, the federal reserve is expected to continue with their stimulus efforts for at least six months.
The correlation theory
Thus, with adequate liquidity and increased bank lending power, the research states will drive the growth of the real estate market by 2021. A strong correlation between housing and store of value assets, such as gold, silver, and Bitcoin, suggests that all these assets are likely to boom in the near future.
Investors usually prefer to be bullish, experts claim. They are waiting for the perfect opportunity to ride the wave of economic recovery. Once that happens, lucrative investment opportunities such as Bitcoin and real estate are likely to rise together.