Corona virus and its implication on real estate. Opinion of non-biased real estate investor.
We had economy slowly rising from 2009 through 2020, which was one of the longest rises in the history of the US.
Probably many of you know this, but ‘’real’’ money could not be made during normal economy, most of the wealth is made only when there is any type of crisis. Thus, and this is my opinion, a group of super wealthy people that poses 80% of the world’s financial resources decided to come up with the Corona virus scare, so naïve American people start dumping their shares on the stock market, which dropped the Dow index by 22% since the beginning of the year.
They don’t teach this in college, but one old economic professor told me when we were at the bar while we were celebrating my MBA graduation in 2009: ‘’Pavel, the three main things that drive the stock market are: greed, fear and media. We only ought to teach you in school that markets are driven by supply and demand’’
Another good thing that I’ve learned in MBA program was from the professor of statistics, he said:
“Every time when somebody is making the claim, you need to ask three questions:
- Who is making the claim? (To find out credibility of the source).
- Why they are making this claim? (To see what kind of affect they want to achieve).
- What is the statistical data? (Mean, Distribution and Standard Deviation).
These were the two best things that I have learned in MBA program and the rest was a total waste of time ?
Thus, this is what we have:
Fear in the market that is driven by the media, stocks decline in price, scared people sell them, smart stay still, super wealthy buy them.
This is what will happen before June 1st 2020+/-
- Our US government will say this: ‘’We spent 500 billion dollars on fighting the corona virus, our economy has lost another 500 billion dollars due to temporary closure of the businesses. Let’s bail out some of the big businesses with tax payors’ dollars and let’s raise taxes.
- After June 1st 2020, everything will go back to normal.
Now lets look at the Corona Virus facts. As of me writing this on 3/18/20 according to the World’s health organization (another ‘’Company’’ that possibly could have biased information that could be influenced by pharmaceutical companies).
I’m rounding numbers to make it easier for you to understand:
roughly 1000 people die from regular flu every day.
roughly 1000 people die from pnemonia per day.
roughly 1000 people die per day from AIDS.
Over 360,000 people die per year from regular flu and only 62 people die per day from Corona virus.
You can check the facts by contacting World Health Organization here https://www.who.int or by sending them an email like I did. gho_info@who.int
And our media that is controlled by super wealthy doesn’t want you to know that 50 times more people die per day from regular flu than from Corona virus!
In addition 80% of the people that have died from Corona virus were more than 70 years old and media doesn’t tell us if they had preexisting conditions such as pneumonia before they were hospitalized.
Thus, look at the statistical information and relax!
My prediction of the effect of the Corona virus on Real Estate:
Worst case scenario, prices will go down by 10%, because it’s difficult to stop this ‘’train’’ of negative information.
Most likely scenario, prices will drop by 2-3%
Happy investing every one!
Update on 3/19/20, I was predicting that US Gov will at least use 1 Trillion dollars of tax payors’ money to fight Corona virus and next day after publishing my post, CNN published this https://www.cnn.com/world/live-news/coronavirus-outbreak-03-19-20-intl-hnk
Makes me feel that I have some connections in the White House 🙂
Another thing that concerned me a lot, was an article published by Forbes on 3/18/20 at 4pm, that FHA would put a stop on all foreclosures and if all other major banks follow FHA, we will have a crash even worse than we had in 2008. I couldn’t predict that our Gov would do such a thing. They really want the real estate market to crash which will pull everything behind. Our regulators lost their minds! At least they will have something to blame on due to poor Govmt decisions.
https://www.forbes.com/sites/dimawilliams/2020/03/18/hud-fhfa-to-stop-evictions-and-foreclosures-as-the-nation-fights-the-coronavirus/#211dce967488
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