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9 Things Help Investors Thrive During Real Estate Recessions

There is a concern among many investors in real estate about the possibility of a recession in light of recent economic uncertainties and how that will affect the real estate market.

In most economic downturns, people lose jobs, and mortgage rates typically go higher than most can afford, crippling their ability to purchase properties. But that doesn’t always spell doom for real estate, so here’s a look at how a real estate investor can survive, or even thrive, during a recession.

1. Branding And Marketing

The best way to survive a recession is to keep marketing your brand. It’s about building a brand that stands out from the crowd.

Branding isn’t just about getting customers to recognize your business; it’s about getting customers to keep coming back for more business as you have established yourself as a reputable brand. One of the best ways to achieve this is through positive marketing.

While most businesses would understandably cut down on marketing during an economic downturn, that’s the perfect time to rump up your marketing efforts, as it has healthy returns. For instance, the return on investment (ROI) for email marketing is $36 for every $1 spent. Here’s what you stand to benefit from good marketing and branding:

  • Gaining a larger audience
  • Increased cash flow
  • Help you take some of your competitors’ clients

2. Learn More About The Real Estate Market And The Recession

You need to have a working knowledge of the economy and how it will impact the real estate industry to stand a chance of surviving a recession. Get to know the causes of the recession and where the money is headed.

In a recession, not all economic sectors will slump; some might perform better than others. Use this knowledge to pivot your business to cater to those sectors that are doing better during the downturn.

Take the 2020 recession, for instance: while shopping in malls dipped by 70% and the office industry slumped due to work-from-home initiatives, the booming ecommerce industry led to a steep increase in demand for warehouses.

3. Invest In Technology

Investing in a customer relationship management (CRM) tool during a recession is one of the smartest moves you could make, as it has an average ROI of $8.71 for every dollar spent.

As a real estate brand, you can use CRM to track client information and make follow-ups. A sound CRM system should have features that enable you to access information about potential buyers and sellers easily and communicate with them using various channels.

Similarly, you can use social media sites and real estate apps to showcase your listings and increase your reach.

Consider technologies such as virtual tours and virtual staging to cut down on costs of staging an open day and staging a listing.

4. Work On Customer Retention Of Your Current Clientele

Keeping your already existing clients should be a major priority. When you work hard to maintain good relationships with your clients, they’ll appreciate it and return the favor. That makes them feel special goes a long way toward building trust. Try some of these customer service strategies:

  • Maintain a customer feedback loop
  • Provide personalized customer service
  • Start a customer education program
  • Give offers and discounts
  • Provide incentives

5. Grow Your Network

Never underrate the power of networking, as it can help your business stay afloat during recessions. You can build relationships with friends and associates to expand your business’s reach and abilities.

A more extensive network will help in acquiring new business leads, which you can work towards closing to improve sales. Additionally, it will help you keep abreast of the latest trends in the market and identify best practices.

Further, networking will increase your connections and opportunities to explore new markets.

6. Cut Expenses

Tough times call for tough measures. Everyone has to make sacrifices to ensure the firm makes it through an economic downturn, which means cutting costs. Reducing expenses is a brilliant idea even in good times.

Lower your expenditure by eliminating items that don’t offer much to the business, such as a cable subscription in the office. Alternatively, realign your financial spending by reviewing your insurance providers to get a better deal, consolidating bank accounts, and avoiding unnecessary debt.

Improving efficiency will also help in cutting down costs as it minimizes wastage. Purchase the right tools, go paperless, and improve time and project management.

7. Stick To Your Business Plan

Economic recession is part and parcel of every business cycle. You don’t need to panic and sell everything. Just stick to your original business plan with just a few adjustments. To stay focused on the big picture, make it a point to refer to your long-term objectives and plans regularly.

Moreover, set short-term weekly and monthly goals, and tweak where necessary as long as they tally with the master plan. You may need to restructure the business plan as recessions can be unpredictable.

8. Re-Evaluate The Business

A recession is the perfect time to take a step back and take a long hard look at the business. Since there’s plenty of time on your hands, use the time to evaluate the company and find any weak points that need fixing.

Maybe business is low because you’re not marketing right, your pricing doesn’t make sense, or you don’t understand prospects. Go over your data, try to work where problems are, and implement potential solutions.

9. Create A Unique Value Proposition

Creating a unique value proposition is one of the best ways to thrive in any market. In real estate, this means differentiating yourself from the competition. That means providing something the others don’t offer.

That could mean anything that offers extras to clients, like diversifying your business by partnering with a mortgage broker, so you offer mortgage provision services in-house.

Final Word

One of the key lessons to surviving a recession is never to stop marketing. That will help build your brand as well as bring in new business. Alternatively, create a unique value proposition, invest in technology, and grow your network to improve sales.

On the other hand, save money by cutting back on expenditure, sticking to the business plan, and retaining your current clients. It also helps to keep abreast of the current economic environment to find opportunities you had not considered before.

Despite the macroeconomic headwinds of recession, your individual economic success could be amazing, as long  as you can navigate and anticipate this crisis.  What outwardly appears to be chaos may be an historic opportunity.

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How The Unemployment Rates Impact The Looming Recession

In the face of higher interest rates and rampant inflation, the jobs market is somehow still going strong. For instance, the economy added an estimated 390,000 jobs in May 2022 and 528,000 in July.

Many businesses have “hiring” signs up, proving that although the current global economic crisis is slowing down the U.S. economy, we are not quite in a recession yet. So, here’s a look at how a recession affects unemployment rates.

Unemployment Rate Measures

To better understand the job market and unemployment rates, it’s essential to know the different categories of ‘unemployed.’ To calculate the unemployment rate, the U.S. Bureau of Labor Statistics (BLS) uses six measurements ranging from U1 to U6.

  • U1 refers to the percentage of people who’ve been unemployed for more than 15 weeks.
  • U2 is the percentage of people who have lost their jobs or finished temporary work.
  • U3 is the official unemployment rate for people without jobs who actively sought work within the past four weeks.
  • U4 encompasses U3 individuals plus those who are discouraged. They stopped looking for work because they believed that current economic conditions were unfavorable.
  • These include individuals described in U4 in addition to marginally attached workers. U5 also includes individuals who would like to work but haven’t looked for work recently.
  • These include people described in U5 plus part-time workers who want to work full-time but economic conditions do not allow it.

The different measures of unemployment can be better understood using the table below.

U3 is the most commonly reported of the six measurements, with U6 being a better depiction of the current unemployment rate. Despite the BLS focusing on U3 as the official unemployment rate, many economists feel U6 is more meaningful because it factors in a more significant percentage of unemployed people.

The current rate for U3 is 3.6%. However, this only takes into account unemployed people actively looking for work. So, if unemployed people stop looking for a job, they no longer form a part of the U3.

This “discouraged” person decreases the unemployment rate since they no longer count as unemployed. What this leads to is a false rate of unemployment.

The U6 unemployment rate as of June 2022 stands at 6.7%. One of the best indicators of the employment market is the temporary help penetration rate. June saw an increase in the temp help employment rate to 2.07% of the total labor market, and the trend is likely to continue.

Another issue affecting employment is the number of workers re-entering the job market as there is increased selectivity in looking for new opportunities.

Typically, one of the indicators of a looming recession is high unemployment. Indeed, apart from scrutinizing factors such as income, manufacturing activity, output, and business sales, the National Bureau of Economic Research (NBER) also factors in the employment levels.

While the GDP has contracted two consecutive quarters, a traditional indicator of a recession, the strong employment market is a real head-scratcher. Staffing companies report finding it difficult to fill the number of open jobs available.

But the NBER is on to something because the common denominator in all recessions seems to be jobs. Take 1960, for example. Household incomes rose if you adjusted them for inflation, but that was a recession. In 2001, the GDP didn’t contract for two consecutive quarters, yet the NBER called it a recession.

Through all the recessions, be it the 1960 or 2020 recession, the unemployment rate always stood higher than 6.1%. With the current figure of 3.6%, it’s perhaps easy to see why the NBER is slow to call this a recession.

Besides, payrolls keep expanding, hitting 1.6% between December 2021 and May 2022. Labor is scarce, with the BLS reporting more than 10.7 million job openings as of June 2022. Those are hardly the signs of recession.

Or maybe the job market is slow to react to the downturn. After all, sales and manufacturing have weakened. Whatever the case, recession or not, it’s a long shot to expect unemployment to rise to the ‘normal’ levels witnessed during a typical recession.

With that, some experts expect a shallow recession, and the jobs market will help cushion against severe dips. That employment growth should also assist in productivity. Most corporates also raked in exceptional profits, which should cushion them further.

President Biden lamented that oil and gas companies made profits at the expense of consumers. He famously quipped that “Exxon made more money than God” after the company posted a first-quarter profit of more than $5.48 billion.

Strong Job Seeker’s Market

Despite fears of a looming recession, the current job market favors job seekers. Job openings are high, while layoffs are extremely low. Daniel Zhao, a senior economist at Glassdoor, agrees that this doesn’t look like a job market headed into a recession, as labor demand is still red-hot.

The uptick in hiring works out for the Federal Reserve’s plan to slow the rising inflation rate. In May, the Federal Reserve increased interest rates by 50 basis points; a move meant to slow down consumer demand without tipping the economy into a recession.

Despite higher interest rates and inflation, the labor market continued going strong in May. A LinkedIn survey showed that hiring went up by 9.8% in May 2022, a figure 10% higher than pre-COVID. Industries with the most significant increase in hiring include accommodation, healthcare, and construction.

Final Word – Recession Threats Have Little Impact On Employment

Despite fears of a recession, the job market is not showing any signs of slowing down. This will continue to positively impact the unemployment rate as job openings remain high and employees continue to select the jobs they want.

A critical element that is often overlooked is not just simply the overall employment rate, the quantity of jobs; but the income associated with the job, the quality of the job.  Despite returning overall employment to pre-pandemic levels, global wage growth has not kept pace with real inflation, and actual productivity has fallen off of a cliff.

At a macro level, I suspect we are in deep trouble.

If you simply need more information. have questions, or want to discuss a specific deal, I’m always excited to help. Reach out to me at

If you are ready to start your journey to financial freedom but want specific additional educational materials, we have a course designed for physicians.

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Why The US Could Be Headed For A “Richcession” In 2023

Economic downturns typically affect everyone irrespective of class, but the poor almost always bear the brunt of recessions. To the wealthy, a recession is nothing but an inconvenience. Not this time round.

Research by financial experts suggests that the next recession predicted to occur in 2023 will likely hurt the rich more than any other economic class. With that in mind, it’s easy to see why they’ve dubbed the 2023 downturn the ‘richcession.’ That is, of course, assuming there will be a recession in the first place.

But, what are the odds an economic downturn will occur in 2023, triggering a richcession? Using the ABC model, the Federal Reserve predicts a 35% chance of a recession in 2023 if there is a tightening of the policy gap. The unconditional estimate is a mere 16%, although a more restrictive policy gap results in a 60% chance of a recession marked by a rapid decline of inflation under the baseline.

Additionally, Lahart argues that the wealth of households in the lower classes grew more throughout the pandemic than those at the top. That could increase the chances of richcession due to the decreased wealth growth among the wealthy caused by a decline in the stock market and a comparatively modest paycheck rise.

What Is Richcession?

A richcession is a sub-branch of a recession, a widespread and prolonged economic downturn that occurs when a country typically experiences decreased economic activity, rising levels of unemployment, and a fall in the nation’s gross domestic product.

In most instances of a recession, the most hard-hit classes are the poor and lower-middle class members. However, this is not always the case. Sometimes recessions affect the rich the most, an isolated circumstance industry insiders refer to as a richcession.

While the US may not be experiencing a recession, the evidence seems to point to one in the near future. A recent Bloomberg survey suggests a 70% chance of a recession in 2023.

Factors like high-interest rates and inflation have fueled the chances of a recession in 2023. Unlike other instances when the US experienced a recession, experts speculate that the 2023 recession will likely affect the rich more than the poor, hence a richcession.

Signs Of A Richcession In 2023

Several factors suggest why there is a strong likelihood of a richcession occurring in 2023:

The Decline In The Net Worth Gap

For the first time in decades, the economic inequality in America has improved. Before the pandemic, the lower 50% were collectively worth $2 trillion. By the end of Q3 2022, that figure had more than doubled to $4.5 trillion.

That is in stark contrast to the fortunes of the high earners. Research shows that individuals between the 50th and 90th percentile’s share of the total net worth dropped from 30.1% before the pandemic to 28.7% by the end of Q3 2022.

As for earnings, the Federal Reserve Bank of Atlanta data shows that workers in the bottom quartile received a 7.4% increase in monthly wage over the same period in November 2021. That measures favorably against workers in the top quartile, who only received a 4.8% increase using the same parameters.

The fall in income for the well-off is significantly attributable to the dip in the stock market. Conversely, the lower 50% can link their fortunes to the government’s COVID-19 relief initiative and the strong labor market.

Changes In The Labor Market

Although unemployment reached an all-time high of 14.7% in April 2020, December 2022 data shows it edged down to 3.5%, well below the long-term unemployment average of 5.73%. Moreover, data from the Bureau of Labor Statistics (BLS) show that job openings still outnumber that of unemployed workers.

The other end of the scale shows that high-income earners felt the brunt of the economic slide, with white-collar workers at the center of recent layoffs. The news is full of stories of big tech companies such as Amazon, Meta, and Twitter letting go of high-profile workers, most of who were earning more than $200,000.

Effects That Richcession Will Have On The Wealthy Class

A richcession could impact the well-offs in the following ways:

Termination Of White-Collar Jobs

The richcession will mainly compromise high-income earners. For instance, Salesforce plans to let go of about 10% of its workforce, about 8,000 workers, in the coming weeks of January 2023. They are doing so to reduce expenses due to concerns about the downturn.

That comes hot on the heels of Meta laying off 11,000 workers, Amazon 10,000, and Twitter 7,500 employees. Vimeo also announced in January 2023 that it plans to lay off 11% of its workers following a similar exercise in July 2022.

Plummeting Stock Market

Investing in the stock market is beneficial, but not in the current climate. The looming fear of a recession is negatively affecting the stock market. A continual fall in stock prices will eventually lead to one thing—plummeting net worths.

Businesses That Target The Well-Off In Trouble

2023 might not be a great year for businesses that target the affluent, as that market segment is likely to run into economic headwinds. White-collar jobs are at risk, the stock market is taking a pummeling, the real estate market is cooling, and the economy is on shaky grounds. That will only spur the affluent to tighten their purse strings.

Those that rely on the lower 50% could be on better footing as the jobs market seems to favor lower-level workers. Even if there is a recession, experts expect the jobs market to remain relatively unscathed and wages to remain stable.

How To Prepare For The Richcession

It’s prudent always to have a backup plan in case the richcession hits. You could use these strategies to help minimize the impact of a richcession:

  • Build an emergency fund and always budget: It’s good practice to have some money put aside, no matter the state of the economy. That will come in handy when there is a financial emergency like a richcession. An excellent target is to have an emergency fund that should sustain you for at least six months.
  • Pay off your high-interest debts first: Such as debt from your credit cards. That should free you from punitive debts and give you enough time to build your cash reserves, enabling you to engage in meaningful investments.

Final Word

If 2023 is to experience a recession, it will likely be a recession. It is a highly unusual downturn that affects the affluent disproportionately to the other economic classes.

Already the signs point to a recession. The stock market dip is affecting the rich, more companies are cutting white-collar jobs than blue-collar jobs, and the lower-income earners have received higher income increases than their well-off compatriots.

Investing in real estate is no longer a secret kept for the nation’s ultra-wealthy! People like you are participating in the action and taking advantage of the numerous benefits of real estate investment.

While the commercial real estate sector is going through a transition, we’re keeping our eyes on what’s important: solid fundamentals. When you’re allocating your hard-earned funds, think long-term and keep it all in perspective. When you are ready to reap the rewards of real estate investing let’s talk.

By Gurpreet Singh Padda, MD, MBA

If you simply need more information. have questions, or want to discuss a specific deal, I’m always excited to help. Reach out to me at

If you are ready to start your journey to financial freedom but want specific additional educational materials, we have a course designed for physicians.