Let's say there's an individual who owns a condominium apartment in a US city, which is being rented out to a tenant. There's still a mortgage owed on the apartment, but there's positive net equity built up in it, and that equity forms a sizable chunk of the individual's current net worth.
For simplicity, let's say that the rest of the individual's net worth is primarily in a 401k account, and the account allows for almost arbitrary investments (any stocks, ETFs, etc, even some low-risk option strategies that do not require margin).
The individual is significantly exposed to the risk that the apartment's value might go down (e.g. due to a real estate market collapse in the US city in question).
Is there some way to make investment choices inside the 401k to somehow hedge against that risk, at least partially? (I would appreciate either a general answer or an answer specific to Seattle, WA being the US city in question).