As I was walking on a snow covered trail, I found a blaze orange sweatshirt. WTF, who loses something like this and doesn’t even notice? It made me start thinking, has the person lost their mind? Has the economy lost its mind? Look at three charts below: Gold, S&P 500, and House Prices? Notice anything? What does this mean for the economy and real estate?
Gold is a hedge for a bad economy
It is interesting to see Gold’s prices run up so quickly as Gold is a hedge for either high inflation or a flight to quality in a bad economy. Yet, the economy by almost every metric is performing relatively well which makes me question why the run up in Gold prices. It makes no sense in our current economy.
S&P 500 hundred following Gold
Now look at the chart below for the S&P 500 from 2022 it is following almost lockstep with Gold. Historically these two charts would diverge, when stocks are doing well, Gold would be flat to declining and vice versa should also occur. The exact opposite is occurring and they are correlating almost one to one.
Real Estate prices following similar trends
Now look at the third chart, median home prices. If we also look for the last 5 years home prices have had a steep run up very similar to Gold and the S&P only to taper off a little over the last year or so. Long and short house prices are correlating to other assets like Gold and the S&P 500.
Almost all assets are correlated now
Based on the three charts above(Gold, S&P 500, and house prices) it is quite obvious that all three asset classes are behaving very similar. So, over the last 5 years as the S&P has increased so has Gold and house prices. It is debatable which of the three is causing the others to increase, but for this analysis it does not matter. What is important is that all three are behaving similarly. Note recently house prices have tapered off, but they are still at historic levels similar to Gold and the S&P so the crux of the argument is still the same.
If everything goes up together, will it come down together?
This is the million dollar question. Does the correlation of these three assets (Gold, S&P, and house prices) work in the inverse? Historically stocks would decline and there would be a flight to assets like Gold so they worked in inverse, but that is not happening today which gives me pause about the future of the economy.
With everything going up together, there is a chance it will all come down together. With these three assets showing such strong correlation for whatever reason over the last 5 years with huge gains in appreciation, it makes me start to think that the inverse will also happen.
For example a hiccup in the S&P leads to a decline in house prices and Gold. Essentially all three assets go down. Now it is debatable how much each one will decline, but there is a likely scenario that all three assets (Gold, S&P, and house prices) all fall at similar times. This would ultimately lead to a major economic shock.
Will shit hit the fan in the economy?
This brings us to the million-dollar question, how likely is the scenario where all three assets decline at the same time? Based on the charts above where everything is going up, there is a likelihood of the inverse also happening. Although this is not my base case for the economy, there is probably a 25% chance of a major shock in the next two years due to the huge correlation in assets. Furthermore, it is very difficult to hedge against the downside risks with so many assets all trading at historic levels already which could amplify the downside swing.
What does this all mean? Real estate along with Gold and the stock market could be in for a much bumpier ride than any economists are predicting. Do you agree or disagree? Take my survey à and let me know!
Additional reading/Resources
https://www.fairviewlending.com/will-mortgage-rates-fall-in-2026/
https://www.fairviewlending.com/best-2026-real-estate-investments/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends 😊. I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games). Learn how to find a reputable hard money lender and why Fairview is the best hard money lender for investors.
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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