According to the latest numbers from the National Association of Realtors, sales of existing homes fell by 5.9 percent between February and March. Sales are 2.4 percent lower, year over year.
One of the causes of this slump has been persistently high mortgage rates. The Fed has held its target interest rate in the 4.25 to 4.50 percent range since December 18, 2024, which has made buying a home more expensive.
However, where others see risk, Dutch Mendenhall — a visionary investor, serial entrepreneur, best-selling author, and founder of Omnico Golf — sees opportunities.
“Real estate is still king in 2025,” Mendenhall says. “While high mortgage rates might dissuade some, smart investors can still make a lot of money in this sector.”
The Need to Diversify with Alternative Investments like Real Estate
To understand why it still makes sense to invest in real estate, Mendenhall points to the larger U.S. economy.
“The past few months have been characterized by erratic fluctuations in the stock market,” Mendenhall says. “Major corrections have been followed by sudden upswings, and this kind of volatility is unnerving for investors for good reason — thousands of dollars can be lost in a single day.”
In addition, the Trump administration’s ever-changing trade policy means that additional gyrations will likely appear in the future. “Even after the administration’s trade agreement with China reduced the tariff from 145 percent to 30 percent, many experts agree that the tariffs are still high and will likely have a negative effect on the American economy,” Mendenhall says. “Plus, the agreement is only temporary. Again, there’s a lot of uncertainty.”
For these reasons, Mendenhall says many investors he knows seek to diversify their portfolios with alternative investments. “Alternative options offer a great hedge against volatility in the stock market,” he explains.
Real Estate is a Hard Asset that Rises with Inflation
According to Mendenhall, real estate in particular is an attractive alternative investment because it’s a hard asset.
“Real estate is a physical thing you can buy,” Mendenhall says. “You can touch the land and the building. There’s also a relatively limited supply of it — right now, the number of properties available for sale is still quite low. All this means a real estate investment often has a financial solidity and stability that stocks lack.”
Another important thing about real estate is that it provides a wide range of options for making money. “Of course, you can use the space yourself,” Mendenhall says. “Considering the rising price of housing, this can be a great advantage. Real estate also gives you a lot of control — you can increase its value by doing strategic renovations, for instance.”
Another option is to rent the property out. “Right now, lots of aspiring homeowners are priced out of the market, so vacancy rates for rentals are historically low,” Mendenhall says. “The upshot is that there’s a high demand for rental properties. Many landlords find they can charge a premium. Investors can create substantial cash flow despite today’s elevated borrowing costs.”
Real estate can also be used as collateral for a loan. “Real estate investors can use it to borrow money they can then leverage to build wealth,” Mendenhall says. “A mortgage can give you a long-term fixed rate for your payments that you can depend on in your calculations. In contrast, other asset classes can be highly variable.”
In addition, Mendenhall points out that the value of real estate has historically increased with inflation. “If tariffs and trade wars continue, then many experts continue to predict more price increases and inflation for the U.S.,” Mendenhall says. “Having an asset that is unaffected by inflation can be a source of great peace of mind. By putting your capital in real estate, you can keep its purchasing power.”
Finally, investing in real estate brings tax advantages. “There’s depreciation, first of all,” Mendenhall says. “You can also deduct many expenses. Don’t forget 1031 exchanges — you can substitute one property for another and defer your capital gains taxes.”
REITs Enable Ordinary People to get a Piece of the Action
Many investors might protest that they don’t have hundreds of thousands, if not millions, of dollars to spend on a real estate deal.
“That’s where real estate investment trusts (REITs) come in,” Mendenhall says. “Basically, these investment vehicles enable ordinary people to pool their resources and invest in real estate projects together.”
Many REITs have the added benefit of being managed by financial and real estate experts, relieving investors from having to find, vet, and manage potential real estate projects themselves.
“For a long time, only the wealthy were able to take advantage of this kind of deal,” Mendenhall says. “That was just unfair. Now everyone can get a piece of the action.”
The Hidden Opportunities in Real Estate
For Mendenhall, making money isn’t about waiting for the perfect economy. Instead, it’s about perceiving the opportunities hiding within less-than-perfect conditions. Greater trends throughout the American economy currently make investments in real estate a good bet.
“You’ve got to be strategic and take the long view,” Mendenhall says. “Real estate has long demonstrated its resilience and value, and that’s why it’s still king.”
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