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 | MyKCMThe 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.

 

 

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Rusnell Real Estate does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Rusnell Real Estate will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
About the Author
Throughout his 15-year real estate career, Ian Rusnell has earned admiration and respect from clients and industry professionals alike for his dedicated service, trustworthiness, and results. He & the RE/MAX brand are part of a company with a powerful local and international presence, as well as a reputation for always putting clients first. Ian, who first made a name for himself in Playa del Rey, has since become a recognized agent throughout the South Bay and Silicon Beach.