Hotel Stocks vs. Real Estate.
April 13, 2020|Hotel Marketing

Property Stocks vs. Real Estate

The COVID-19 pandemic is crashing the stock market in the United States and all around the world.

Stock values are going down at unprecedented levels, prompting the most withdrawals of cash from investors since the 2008 financial crisis. With the volatile stock market, many are diverting their investments to real estate, which they believe is historically one of the more stable investment options.

Is real estate truly more stable than the stock market?

Stocks are volatile because they are affected by a variety of market forces, including the number of people buying and selling them at any given moment. Stock charts update by the millisecond, literally.

Real estate is also volatile because it is influenced by a host of economic factors, including the changes in the development and security of the property location. However, unlike stocks, real property investments are not valued in real-time. Hotels, buildings, or apartments get valued every once in a few years.

At first glance, it might seem that real estate is more stable, but if you were to plot real property investment values on a chart and put it side by side with the stock market chart, it would fluctuate just as much and just as fast by the second. Thus, it is not accurate to say that the stock market is tanking, but real estate is going up.

For example, at one point during the COVID-19 pandemic, a Hilton real estate property cannot even sell because people are on lockdown, and whole economies are shutting down, effectively making the property value zero. However, the Hilton property stock at that same time will show a value, which is not zero.

Remember, the behaviors of the stock market and the real estate market are both volatile. However, because of the dynamics of the real estate market, the exact valuation of a real property at any given moment is not easily known.

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