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Old 01-24-2019, 08:13 PM
 
Location: Raleigh NC
8,232 posts, read 6,483,531 times
Reputation: 7236

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Quote:
Originally Posted by riaelise View Post
Thank goodness I still think of my home as "the place where I live" rather than primarily an investment

because market rise or fall, my home still makes me happy!
hey, even better news - your home's value increased again in 2018.
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Old 01-24-2019, 10:59 PM
 
Location: Saint John, IN
10,883 posts, read 3,567,387 times
Reputation: 13157
Quote:
Originally Posted by jdhall1 View Post
Prices are up in my market-60 minutes north of NYC. The average townhome price increased 10% in 2018 over 2017 and the average single family price increased about 2.5% over the same time period. Overall number of homes in down, that's because there are not many people selling.
Market is still booming here too! We're 35 mile SE of Chicago. Homes selling within a week for asking or over and new home construction is going up like crazy.
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Old Yesterday, 03:06 AM
 
67,435 posts, read 68,292,027 times
Reputation: 45271
Quote:
Originally Posted by Mikala43 View Post
If your not looking at buying and selling, all of the numbers mean nothing. Heck, they don't mean a lot if you are buying and selling is specific areas, but it still good to keep an eye on overall trends (IMO) when you are.
it is no different then being a long term investor . you may have no reason to care what your home or investments are worth at any given time but that is their value .

many times we have to relocate out of the blue . living in an area with no public transportation and all of a sudden finding out you can't drive anymore , or needing to be closer to family for health or other reasons happen . so never confuse not needing to know with the fact you just don't have any use for knowing at that moment
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Old Today, 09:32 AM
 
294 posts, read 50,874 times
Reputation: 409
I find the reported slowdown to be more of a short-term anomaly.

The article says first-time buyers comprised 32% of the total, and all-cash offers comprised 22% of the total.

Both of those types of buyers are mostly engaged in asset class transfers - taking wealth stored in one type of asset (equities, bonds, gold, money market accounts, fine art, etc) and moving that wealth into another type of asset (real estate). Equities in the form of common stock, together with ETFs and Mutual Funds which are themselves comprised primarily of common stock, are the primary wealth storage vehicle and primary long-term investment vehicle for most people. Let's call that the value of The Stock Market.

The slowdown in real estate transactions, it seems to me, is mostly related to the decline in the price level of The Stock Market. After all, people are moving wealth from The Stock Market to real estate, so when the value of their wealth in equities declines, people tend not to cash in their equities until they (hopefully) go back up, thereby affecting the volume of real estate transactions.

While all real estate is local, of course, the value of The Stock Market is not a local phenomenon.

So - why has the value (price) of The Stock Market declined over the past 4 and a half months?

The price of the common stock of any company is best computed as the present discounted value of its risk-adjusted future stream of earnings attributed to that share of stock. Two things have come into play beginning the end of last summer:
  • The Fed started making noises about ongoing increases to the interest rate. This negatively affects the present value of those future earnings, which, given that stock's Price/Earnings multiple (P/E multiple), causes its price to drop.
  • The expectation that at least one of the House of Representatives or The Senate would flip to Democrats (and possibly both). This would signal a return to disastrous anti-business policies of the prior administration, which lowers the risk-adjusted future stream of Earnings, which, given that stock's Price/Earnings multiple (P/E multiple), causes its price to drop.

Thus, to fund the purchase of the house (either all-cash or merely its down payment), people have had to cash in more shares of stock. People don't like to do that.

So, the decline in the stock market, in my mind, explains most of the decline in the number of real estate transactions.

At some point - maybe already - stock market volatility will be damped. The S&P 500 ETFs have already left correction territory. We will be in a "new normal" situation and people will resume their plans to transfer wealth back into real estate per their original plans.
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Old Today, 09:41 AM
 
67,435 posts, read 68,292,027 times
Reputation: 45271
we can guess all we want but with this country made up of 1500 mini economies all the reasons are as varied as can be .
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Old Today, 11:37 AM
 
Location: Raleigh NC
8,232 posts, read 6,483,531 times
Reputation: 7236
Quote:
Originally Posted by RationalExpectations View Post
I find the reported slowdown to be more of a short-term anomaly.

The article says first-time buyers comprised 32% of the total, and all-cash offers comprised 22% of the total.

Both of those types of buyers are mostly engaged in asset class transfers - taking wealth stored in one type of asset (equities, bonds, gold, money market accounts, fine art, etc) and moving that wealth into another type of asset (real estate). Equities in the form of common stock, together with ETFs and Mutual Funds which are themselves comprised primarily of common stock, are the primary wealth storage vehicle and primary long-term investment vehicle for most people. Let's call that the value of The Stock Market.

The slowdown in real estate transactions, it seems to me, is mostly related to the decline in the price level of The Stock Market. After all, people are moving wealth from The Stock Market to real estate, so when the value of their wealth in equities declines, people tend not to cash in their equities until they (hopefully) go back up, thereby affecting the volume of real estate transactions.

While all real estate is local, of course, the value of The Stock Market is not a local phenomenon.

So - why has the value (price) of The Stock Market declined over the past 4 and a half months?

The price of the common stock of any company is best computed as the present discounted value of its risk-adjusted future stream of earnings attributed to that share of stock. Two things have come into play beginning the end of last summer:
  • The Fed started making noises about ongoing increases to the interest rate. This negatively affects the present value of those future earnings, which, given that stock's Price/Earnings multiple (P/E multiple), causes its price to drop.
  • The expectation that at least one of the House of Representatives or The Senate would flip to Democrats (and possibly both). This would signal a return to disastrous anti-business policies of the prior administration, which lowers the risk-adjusted future stream of Earnings, which, given that stock's Price/Earnings multiple (P/E multiple), causes its price to drop.

Thus, to fund the purchase of the house (either all-cash or merely its down payment), people have had to cash in more shares of stock. People don't like to do that.

So, the decline in the stock market, in my mind, explains most of the decline in the number of real estate transactions.

At some point - maybe already - stock market volatility will be damped. The S&P 500 ETFs have already left correction territory. We will be in a "new normal" situation and people will resume their plans to transfer wealth back into real estate per their original plans.
you make a very good point about investment values affecting buyers, though I would disagree that it includes first-time buyers. In my experience, incredibly few FTB's are saving through investing vehicles for their downpayment. Nor should they, really.
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Old Today, 11:42 AM
 
67,435 posts, read 68,292,027 times
Reputation: 45271
If they do it should be pulled out during the bull at some point way before deployment
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