The coronavirus economic shock has left some questioning the stock market. But that might be based on not knowing where to look for opportunities. There’s no getting around the fact that COVID-19 has done a number on stocks. Now timing could be important. After such a massive pull-back, there could be some of the biggest opportunities in the stock market today. You just need to know where to look before “Main Street” makes its move.
The results were recently revealed from Gallup’s annual Economy and Finance survey, conducted April 1–14 among 1,017 U.S. adults. Along with stocks and mutual funds, other options in the survey included real estate, bonds, gold and savings accounts or CDs. Based on the results, real estate remains the most popular investment choice. Thirty-five percent of Americans say real estate is the most favored long-term investment, which has been the case since 2013.
Over one-third of Americans have named real estate as the top investment since 2016. But what if there was a way to take advantage of both the stock market and real estate markets? It won’t take long to figure out that there is a way and it’s got everything to do with real estate stocks. But which will be the best to watch this year after coronavirus has faded off into the land of Ebola, Zica, and the Spanish Flu?
What’s Next For The Real Estate Industry? A Bet On Residential
“I think that the desire for larger apartments will come back into style and many will be looking to size up — whether sizing up in square footage, light, outdoor space, view, or amenities,” says Ian Slater, a broker with Compass in Manhattan. “The concept of a ‘microapartment’ being enough in New York City likely will become a very challenged notion. New York may for a time, not be thought of as ’everyone’s living room’: buyers will want their own living room!”
While the pandemic has promoted some to wonder whether the trend toward urban living will ebb, most agents don’t think that will stop people from investing in real estate in large metropolitan areas.
As part of a trend that predates the Covid-19 crisis, and is now accelerating because of it, hospitals, private medical groups, banks and a wave of online retailers are snapping up dozens of vacant sites, obsolete offices and empty stores in commuter zones across the tri-state area for example.
Those businesses — all deemed essential under Gov. Andrew Cuomo’s March executive order — could spark a long-awaited transformation of the commercial real estate markets in swaths of Long Island, Westchester, New Jersey and Connecticut.
Similarly, local housing developers in the suburbs are betting on big shifts as urbanites warm to less-dense areas. With thousands of New Yorkers now sheltering outside the city, and a growing number looking to stick to more remote areas, the pandemic is spurring deep societal changes that could spark new opportunities for the suburban real estate markets.
Betting Against Malls
One of Wall Street’s most successful investors, billionaire Carl Icahn, warned in a recent interview with Bloomberg that some stocks are overvalued, and although there will be “good opportunities” to buy, certain sectors could feel more pain.
Since mid-2019, Icahn’s been betting against the CMBX.6, an index of commercial real estate mortgage-backed securities. That trade is often described as the “mall short,” because so many of the underlying loans are to retail centers like shopping malls.
Icahn’s favorite bet is evidently paying off during the coronavirus, as widespread business shutdowns and store closures have led big retailers like Neiman Marcus and J.C. Penny to explore bankruptcy. Since early March, several tranches of the CMBX 6 index have plunged up to 40%. “It’s ‘08 all over again,” Icahn said, comparing the current environment to the subprime mortgage debt collapse during the 2008 financial crisis. Where do you stand on real estate and real estate stocks?