Why the Stock Market Correction Probably Won’t Impact Home Values

[Ken and Ari Walker]

Having been in the real estate and mortgage industry for over 3 decades, I have to say that I’ve survived many market changes – good and bad.  During the rough times I feel it’s important for leaders in our industry o share calming and factual information.

At my family owned and operated alternative financing company we are thinking outside of the box.  Figuring out more ways to get our message out that we are available to assist anyone in need of our financing; Supporting our community in any way we can during this time of unprecedented circumstances. 

This recent article by KMC does a great job of stating facts and spreading calm. Please help spread this around!

Best, Forest – The Guy in the White Hat
Broker/Owner Sun Pacific Mortgage & Real Estate which provides Hard Money loans throughout California for real estate needs since 1988.
DRE license #01000559 NMLS #289456

Published March 24, 2020 by Keeping Current Matters: 

Why the Stock Market Correction Probably Won’t Impact Home Values

With the housing crash of 2006-2008 still visible in the rear-view mirror, many are concerned the current correction in the stock market is a sign that home values are also about to tumble. What’s taking place today, however, is nothing like what happened the last time. The S&P 500 did fall by over fifty percent from October 2007 to March 2009, and home values did depreciate in 2007, 2008, and 2009 – but that was because that economic slowdown was mainly caused by a collapsing real estate market and a meltdown in the mortgage market.

This time, the stock market correction is being caused by an outside event (the coronavirus) with no connection to the housing industry. Many experts are saying the current situation is much more reminiscent of the challenges we had when the dot.com crash was immediately followed by 9/11. 

As an example, David Rosenberg, Chief Economist with Gluskin Sheff + Associates Inc., recently explained:

“What 9/11 has in common with what is happening today is that this shock has also generated fear, angst and anxiety among the general public. People avoided crowds then as they believed another terrorist attack was coming and are acting the same today to avoid getting sick. The same parts of the economy are under pressure ─ airlines, leisure, hospitality, restaurants, entertainment ─ consumer discretionary services in general.”

Since the current situation resembles the stock market correction in the early 2000s, let’s review what happened to home values during that time.

The S&P dropped 45% between September 2000 and October 2002. Home prices, on the other hand, appreciated nicely at the same time. That stock market correction proved not to have any negative impact on home values.

Bottom Line

If the current situation is more like the markets in the early 2000s versus the markets during the Great Recession, home values should be minimally affected, if at all.

Click here for the original article!