{"id":5478,"date":"2019-08-27T07:47:43","date_gmt":"2019-08-27T11:47:43","guid":{"rendered":"https:\/\/dankrell.com\/blog\/?p=5478"},"modified":"2019-08-27T07:47:50","modified_gmt":"2019-08-27T11:47:50","slug":"stock-corrections-and-housing","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2019\/08\/27\/stock-corrections-and-housing\/","title":{"rendered":"Stock Corrections and Housing"},"content":{"rendered":"\n
\"stock<\/a>
Foreign Home Buyers Investing in the USA<\/figcaption><\/figure><\/div>\n\n\n\n

Each time the stock market plunges there\u2019s speculation about a wide spread economic contagion.\u00a0 Talking heads and news headlines predict doom and gloom, as well as speculating about the effects on the housing market.\u00a0 Because Wall Street reacts to all types of news and events, the effect of a stock crash on the housing market can vary. But are stock corrections and housing slumps connected?<\/p>\n\n\n\n

If you want to see direct effects of stock corrections and housing slumps, you need only look at the stock market corrections in 2015 and 2018<\/a>. Both stock market shocks were reactions to events in the US and globally.\u00a0 The extended stock sell-off during 2015 was a reaction to China\u2019s currency devaluation as a result of their low GDP as well as poor economic data that came from the EU.\u00a0 The steep equities decline that happened during August through September of that year was bad timing for the housing market, as it occurred when the fall market was gearing up.\u00a0 Consumer confidence dropped and home buyers were concerned about home values. As a result, home sales slowed during the fall of 2015.<\/p>\n\n\n\n

Moving forward, February 2018 is one of the most volatile trading months<\/a> in recent history.\u00a0 That month saw two of the largest daily losses of the Dow Jones Industrial Average (both over 1,000 points).\u00a0 The market correction was due to Fed rate increases and concerns of inflation.\u00a0 The stock market correction occurred before spring home buyers were out in full force, so the short-lived event had minimal effect on home sales.\u00a0 Although home prices continued to post gains, existing home sales declined the second half of the year after an active spring and summer.<\/p>\n\n\n\n

Are stock corrections and housing slumps connected?<\/h3>\n\n\n\n

This month\u2019s stock market one-day plunge was likely tied to tariffs, trade and currency wars.\u00a0 The large decline occurred after China devalued its currency so as to make its consumer goods cheaper in the face of increasing tariffs. <\/p>\n\n\n\n

Regardless of the impact of equities, it\u2019s important to point out that home sales have been inconsistent throughout the year.\u00a0 A July 23<\/a>rd<\/a><\/sup> NAR press release<\/a> indicated that existing home sales are 2.2 percent lower than last year.\u00a0 Chief NAR economist Lawrence Yun stated, \u201cHome sales are running at a pace similar to 2015 levels \u2013 even with exceptionally low mortgage rates, a record number of jobs and a record high net worth in the country\u2026<\/em>\u201d \u00a0\u00a0Although it may feel like we are repeating the housing cycle of 2015, it\u2019s for different reasons.\u00a0 Like then, home sale inventory is low and home buyers are anxious about increasing home sale prices.\u00a0 However, differences include low mortgage rates, high consumer sentiment, and a stronger economy.\u00a0 <\/p>\n\n\n\n

Although the overall effects of current stock\nvolatility on the housing market may be minimal, equities corrections are typically\nharsher on upper bracket and luxury homes. \nDemand for starter homes will remain high, while upper tier homes will have\nto adjust pricing.  Yun stated \u201cImbalance\npersists for mid-to-lower priced homes with solid demand and insufficient\nsupply, which is consequently pushing up home prices<\/em>\u2026\u201d<\/p>\n\n\n\n

Although stocks rebounded the next day, we really don\u2019t know yet if this is the beginnings of stock correction or a one-day event, so there is no way to gauge an immediate effect on home buyers.\u00a0 However, A July 17th<\/sup> NAR report indicated that foreign home buyers have been affected by a slowing global economy and low US home sale inventory.\u00a0 The NAR <\/a>Profile of International Transactions in U.S. Residential Real Estate 2019<\/a><\/em> indicated a 36 percent decline of foreign investment in U.S. residential real estate from last year.\u00a0 It\u2019s likely that foreign investment may further erode as a currency war develops.<\/p>\n\n\n\n

By Dan Krell
Copyright \u00a9 2019<\/p>\n\n\n\n

Original located at https:\/\/dankrell.com\/blog\/2019\/08\/27\/stock-corrections-and-housing\/<\/p>\n\n\n\n

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Disclaimer<\/a>.\n This article is not intended to provide nor should it be relied upon \nfor legal and financial advice. Readers should not rely solely on the \ninformation contained herein, as it does not purport to be comprehensive\n or render specific advice. Readers should consult with an attorney \nregarding local real estate laws and customs as they vary by state and \njurisdiction. Using this article without permission is a violation of \ncopyright laws.<\/p>\n","protected":false},"excerpt":{"rendered":"

Each time the stock market plunges there\u2019s speculation about a wide spread economic contagion.\u00a0 Talking heads and news headlines predict doom and gloom, as well as speculating about the effects on the housing market.\u00a0 Because Wall Street reacts to all types of news and events, the effect of a stock crash on the housing market … <\/p>\n

Continue reading “Stock Corrections and Housing”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[139,288,13,26,1201,287],"tags":[870,466,797,593,1087],"class_list":["post-5478","post","type-post","status-publish","format-standard","hentry","category-home-sales","category-housing-market","category-real-estate","category-real-estate-market","category-stock-market","category-wall-street","tag-home-sales","tag-housing-market-2","tag-real-estate","tag-real-estate-market-2","tag-stock-market"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-1qm","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/5478","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=5478"}],"version-history":[{"count":11,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/5478\/revisions"}],"predecessor-version":[{"id":5490,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/5478\/revisions\/5490"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=5478"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=5478"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=5478"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}