While a bear market in stocks is well-defined, a bear market in real estate might not be as clear cut. But the concept does exist, and investors need to understand how a bear market can impact their investments.

Investors can typically define a bear market as a period of sharp decrease in prices and overall market value. A bear market can last anywhere from a few months to several years. During this time, investors typically pull out of the market to focus on taking profits, which leads to a decline in prices. During a bear market, the average household income might also decline, and mortgage rates may increase, which can lead to buyers pulling out of the housing market.

Investing during a bear market can be challenging but it’s not impossible. The key is to look at the long term. Real estate tends to outperform other asset classes over the long run, even during a bear market. If you are a buy-and-hold investor, you can benefit from a bear market because it allows you to acquire properties at lower prices.

In addition, you can take advantage of low interest rates, which makes it more affordable to borrow money and purchase property. There are certain types of properties that also perform well during a bear market, such as consumer staples or utilities. These types of properties have a tendency to do well during bear markets because people still need these necessities even in tough times. You can invest in these sectors through an index fund or exchange-traded fund (ETF) that tracks a market benchmark.