War has always reshaped economies, markets, and societies. For real estate investors, understanding how past global conflicts affected asset values, cash flow, and investor behavior is essential for preparing for the unthinkable. While history never repeats exactly, it often rhymes. If we enter a World War III situation, investors should learn from the economic and real estate dynamics of World War I and II and prepare accordingly.

A Look Back: World War I (1914–1918)

During World War I, the U.S. economy was initially neutral but eventually boomed due to industrial production and war financing. The stock market closed for four months in 1914—the longest shutdown in U.S. history—reflecting fear and uncertainty. When it reopened, equities swung violently before stabilizing as war production drove growth.

For real estate:

Urban rentals thrived: Demand for housing near factories increased as workers flocked to cities.
Inflation surged: Housing and land prices rose, but rents were sometimes capped by wartime policies.
Liquidity issues: Financing dried up in the early years, but stabilized later as the war economy ramped.
Agricultural land: Farmland surged in value due to demand for food exports, but this later reversed in the 1920s.

War economies can both suppress and inflate asset prices depending on government intervention and supply-demand shocks.

World War II (1939–1945): A More Complex Picture

World War II had a different trajectory. The Great Depression still lingered when the war began, but the U.S. experienced massive industrial growth after entering the conflict in 1941.

Stock Market:

The Dow Jones Industrial Average fell when war began but recovered strongly, rising more than 50% from 1942–1945 as defense spending fueled growth.
Defense-related companies (steel, oil, manufacturing) became hot assets.

Real Estate:

Residential rental demand spiked: Millions moved to urban centers for war production jobs.
Government control of rents and housing: The U.S. created the Office of Price Administration, which imposed rent controls in many markets to prevent runaway inflation. This kept investor returns flat, though values of some properties appreciated after the war.
Construction halted: Non-military construction was frozen, creating a severe housing shortage by 1945. After the war, the GI Bill and pent-up demand unleashed a housing boom.
Farmland remained strong: Food supply was crucial, and agricultural land values were stable to rising.

Real estate can be resilient during war, but policy intervention (rent controls, construction limits, rationing) heavily impacts investor returns.

What Investors Should Consider in a Potential World War III

If global conflict breaks out today, conditions will differ due to globalization, advanced technology, and financial interconnectedness. Still, investors should prepare for certain themes:

Liquidity and Capital Preservation

Stock markets are likely to experience sharp selloffs, as in both prior wars. Investors may flock to hard assets like gold, real estate, and commodities.
Holding cash reserves and maintaining strong balance sheets will be critical.

Government Intervention

Expect potential rent controls, eviction moratoriums, or housing freezes in high-demand urban centers.
Construction materials could be diverted to military use, halting new housing starts—leading to shortages later.

Urban vs. Suburban Trends

Urban centers tied to defense, logistics, or healthcare may see a surge in demand.
Conversely, cities vulnerable to attacks or unrest may face outmigration. Investors should weigh geopolitical risk when concentrating in large metros.

Energy and Agricultural Assets

Wars elevate the strategic value of farmland, water rights, and energy-linked properties.
Agricultural land may once again become a hedge against inflation and global food insecurity.

Inflation and Debt

War spending is inflationary. In both WWI and WWII, inflation surged despite rationing.
Investors with fixed-rate debt could benefit, as rents and property values rise while debt is repaid with cheaper dollars.

Post-War Housing Booms

History shows that wars suppress construction and create shortages. After both world wars, there were explosive housing booms (the 1920s suburban growth, the 1950s GI Bill-fueled expansion).
Investors who hold property through the conflict may capture massive appreciation once peacetime returns.

Practical Steps for Today’s Investors

Diversify Globally

Don’t overexpose yourself to one geography that could be hit hard by war disruption.

Prioritize Essential Assets

Housing, farmland, industrial properties tied to logistics or defense may outperform.

Review Lease Clauses

Understand how government intervention (rent controls, moratoriums) could impact your contracts.

Maintain Low Leverage

Wars bring volatility; avoid being overleveraged when liquidity dries up.

Build Cash & Commodities Exposure

Balance real estate with liquid stores of value.

Plan for the Aftermath

Anticipate a post-war housing surge, especially if construction is suppressed during the conflict.

If World War III erupts, fear and volatility will dominate at first, but history shows real estate is often among the most resilient asset classes. Investors who stay disciplined—balancing liquidity, essential property types, and long-term positioning—can not only survive but thrive when stability returns.

As Winston Churchill once said: “Never let a good crisis go to waste.” For real estate investors, that means preparing today for resilience tomorrow.