How the stock market crash will affect home price? (2015, foreclosures, 9%)
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Are we in 2008 again? I am ready to buy and made an offer but now scared because China market crashed another 9% today and the US stock market will surely follow albeit with a smaller drop. I fear that maybe home price will drop 20% right after I buy. I am buying a townhouse and historically townhouse price go down quite fast.
If you are planning To buy for investment purposes then I think you are correct to be concerned. If you are buying a home to live in long term.....5 to 10 years or more then get in now before interest rates go up. I bought my home as a long term home. Sure I always have resale on the back of my mind, but I am not worried since I have no plans to leave my home.
well i can tell you until this recovers we put buying the co-op we were going to buy on hold . i am not comfortable buying when net worth slid the last 2 weeks as much as 1/2 the purchase price so we will wait .
i am sure there are many others who will step out of the buyers market for now .
Hard to say at this point- the speed and large drops in the markets are a bit concerning but I'm not sure ready to call it a '08/'09 2.0 or not yet. I think the banking system is in much more stable state then it was back then. I don't think housing prices have recovered as much as the stock market has since that time.
Now if the stock market is signaling something more sinister in the economy & unemployment rates rise causing increases in foreclosures then housing prices lower.
This can also motivate the big money to move away from the stock market and into real estate, driving up real estate prices.
In many markets, the big time investors had exited leaving only home buyers and flippers to battle it out. If they come back to the market, housing can get crazier. Or it can start chasing second/third tier real estate cities and driving them up even more.
An astute investor once told me that stocks and housing usually take turns attracting big money.... until there is a crash.
Or the stock market can rally and then things are back to normal. Your crystal ball is as good as mine.
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Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I'm no economist, but I suspect that part of the crash in China is due to their more affluent citizens taking their money out of the market and buying real estate here and in Canada. That drives prices up, not only for homes but also for commercial real estate - and high rises.
China's stock market is only the result of "stupid money" and keeping up with the joneses.
The chinese had too much cash and thought they could make a quick profit from the stock market. Of course the ponzi scheme couldn't be sustained.
Look at the ridiculous chart bubble....
and draw a straight line through it.
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