It's been a rocky road the last couple of weeks on the stock market and it has sent some into a panic. It's gotten a lot of people to rethink their investments and take a closer look at their financial picture, but what impact does this have on the real estate market?
Experts say that there's not a lot to worry about if you're planning on buying a home even though a nearly 1200 point drop is a little disconcerting. Most financial experts are some sort of correction coming because of the robust market over the last two years. As interest rates rise, the stock market tends to slow down. But most financial experts say that these historical highs over the last two years were bound to result in some sort of balancing act because of inflation and rising interest rates.
The effect on homebuyers or the potential impact on real estate is expected to be nominal. Most experts say the effect will be minimal and temporary. Of course, the stock market is the long game and depending on where you have your investments, you could be worried about the future. If you're planning on pulling out money as a down payment, your down payment may have shrunk considerably. If your goals are more than 10 years away you probably don't have much to worry about. But, if you were going to use that money as a down payment It may be time to reevaluate your portfolio with your financial advisor.
So what is the long-term effect on the real estate market? Publicly traded real estate based companies have moderate losses over the last couple of weeks and real estate investors felt an immediate pinch. While in reality, the effects may not be terminal, the potential for consumer confidence could have a far greater impact than just a few drops in the market.
Confidence in buying and consumerism has a far greater impact on the overall economy.It's not so much what's actually happening but the perception of it. Few people are likely to commit to a large mortgage payment if they feel that the economic future is uncertain. Even if people's retirement funds are not going to be touched for years, lack of confidence can be enough to deter people.
But, even though the stock market went down a bit, the unemployment rate is low and wage growth is picking up. Small upticks in mortgage rates have been slow down the real estate market in a lot of major cities across the US, Portland being one of them. The stability of real estate is an asset should help the industry is real estate is almost always a good investment. So all in all, investing in real estate over stocks right now sounds a lot more attractive. [Source]