• English
  • Español
AGENTS: Did you know you can share a personalized version of this post? Learn more!
Array
(
    [url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [title] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [description] => 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.
    [description_plain] => 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.
    [twitter_user] => 
    [twitter_hashtags] => 
    [twitter_tweet] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [post_id] => 2072637
    [user_image_url] => 
    [title_plain] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [short_url_whatsapp] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url_twitter] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [pinterest_image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [pinterest_desc] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [pinterest_id] => 
    [list_of_articles_mode] => 
    [full_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [salt] => 65939524
    [essb_encode_text] => 
    [essb_encode_url] => 
    [essb_encode_text_plus] => 
)
Array
(
    [url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [title] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [description] => 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.
    [description_plain] => 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.
    [twitter_user] => 
    [twitter_hashtags] => 
    [twitter_tweet] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [post_id] => 2072637
    [user_image_url] => 
    [title_plain] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [short_url_whatsapp] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url_twitter] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [pinterest_image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [pinterest_desc] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [pinterest_id] => 
    [list_of_articles_mode] => 
    [full_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [salt] => 65939524
    [essb_encode_text] => 
    [essb_encode_url] => 
    [essb_encode_text_plus] => 
)
Array
(
    [url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [title] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [description] => 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.
    [description_plain] => 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.
    [twitter_user] => 
    [twitter_hashtags] => 
    [twitter_tweet] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [post_id] => 2072637
    [user_image_url] => 
    [title_plain] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [short_url_whatsapp] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url_twitter] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [pinterest_image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [pinterest_desc] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [pinterest_id] => 
    [list_of_articles_mode] => 
    [full_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [salt] => 65939524
    [essb_encode_text] => 
    [essb_encode_url] => 
    [essb_encode_text_plus] => 
)
Array
(
    [url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [title] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [description] => 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.
    [description_plain] => 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.
    [twitter_user] => 
    [twitter_hashtags] => 
    [twitter_tweet] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [post_id] => 2072637
    [user_image_url] => 
    [title_plain] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [short_url_whatsapp] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url_twitter] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [short_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [pinterest_image] => https://files.keepingcurrentmatters.com/wp-content/uploads/2020/03/23130833/20200324-KCM-Share.jpg
    [pinterest_desc] => Why the Stock Market Correction Probably Won’t Impact Home Values
    [pinterest_id] => 
    [list_of_articles_mode] => 
    [full_url] => https://www.keepingcurrentmatters.com/2020/03/24/why-the-stock-market-correction-probably-wont-impact-home-values/
    [salt] => 65939524
    [essb_encode_text] => 
    [essb_encode_url] => 
    [essb_encode_text_plus] => 
)
, , ,

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

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.Why the Stock Market Correction Probably Won’t Impact Home Values | Keeping Current MattersThe 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.


Members: Sign in now to set up your Personalized Posts & start sharing today!

Not a Member Yet? Click Here to learn more about KCM’s newest feature, Personalized Posts.

3 replies
  1. Jamaal Sabree
    Jamaal Sabree says:

    I understand the similarities between the dot-com crash/911 and COVID-19. The question I have is, what was the unemployment rate then, versus now? Wouldn’t the unemployment rate be the thing to cause the housing market to crash?

    Reply
      • Flip
        Flip says:

        Are you actually suggesting that people would/could/should use unemployment income to qualify for a loan or factor into DTI calculations? At best that’s unclear, and at worst that’s predatory advice.

        To Jamaal’s point about unemployment, yes you’re correct that unemployment does effect who will be buying or selling, which effects inventory, which effects pricing. In addition, banks are tightening regulations and qualifications on lending as of last week, as well as effectively cutting out HELOC products altogether. Minimum scores of 720, tighter DTI, higher down payments, changes in Non Conforming qualifications. It’s getting harder to borrow right now, because they are concerned with bad paper on their books.

        If you think this won’t impact housing prices, you’re trying to sell to (not trying to educate) your clients, period.

        This is not a terrible time to buy a home, but it is a terrible time to rush into one. Major metropolitan areas have a certain inertia behind their markets, usually 1-2 fiscal quarters, so they’ll appear resilient at first, but as more paper goes bad (loan defaults due to lost jobs) the market will change.

        Now, lenders are working overtime to prevent this from happening. Despite it looking altruistic, it’s actually much much cheaper to delay your payments by a few months than it is to go through the process of taking someones home if they have defaulted.

        All in all, the general gist is this. Lenders, banks, hard money sources, it’s all going to be harder to come by for a while. This will impact pricing. Those same entities are working hard to prevent that from happening, and not for your sake. HOWEVER it is for the benefit of the economy that they do so, so vilifying them for it is also silly. Keep your eyes open in your local markets, watch inventory, and take a breath, don’t let anyone talk you into buying before you’re ready.

        Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *