How Does the Stock Market Affect Real Estate? … and My BIG TIP.
Has the stock market peaked?
Is it time to cash out?
Where do you put the money?
Historically, the stock market and real estate market were regulated separately and investors would go back and forth in the markets. When the real estate market peaked out, investors moved their profits into the stock market which had been fairly flat the past couple years. Then when real estate profits peaked, they moved back into the stock market.
In the past decade, rather than riding one roller coaster to top, getting off and jumping on the other roller coaster at the bottom, both markets were combined into a giant twisty-twirly roller coaster.
In 1999, deregulation signed by President Clinton, allowed banks (banksters) into the stock market, and stock traders into real estate. Not quite so simply or directly, but through bonds witch-like secret potions called derivatives.
Greenspan said, “I’m a math guy, and even I don’t understand derivatives.” He then went on to say, “The markets will regulate themselves.”
“We need to find more ways to get people into houses,” said President Bush.
Previously, banks were allowed to give out mortgages on funds limited by their cash holdings and government-backed programs such as FHA, Fannie Mae and Freddie Mac. Wall Street genius traders recognized deregulation as the new Wild-Wild West with the opportunity to create more money for real estate loans, packaging them into bonds and many new security devices to sell to the world. This flooded the real estate buying market with loose money for loans.
Real estate values are base on the simple premise of supply and demand. High demand and low supply creates higher value.
With lack of regulation, lack of responsibility, lack of accountability … basically legalizing corruption … the stock market created a huge demand by buyers on a limited supply of real estate, resulting in the crazy appreciation of the early last decade. Lenders, recognizing the end had come, halted their lending resulting in instant elimination of demand, dropping-off-the cliff of real estate values, then massive loan defaults, foreclosures, short sales, and the collapse of many banks and financial institutions.
gave me an award for “Online Marketing Excellence” in 2009 for my viral article “Real Estate Hangover 2009” — sort of like sharks awarding the sheriff in “Jaws” for posting “Shark Warning” signs on the beach. They knew no one would read the signs, and by this time the roller coaster rides had crashed into the shark-infested water.
So now, rather than the historic see-saw of investors moving back and forth from stocks to real estate roller coasters, the financial markets have become blurred.
Financial bloggers debate:
“Stock market investors are fearful of a correction and will return to the safe harbor of real estate.”
“Sellers, recognizing they have recovered losses of the last decade and the frail economy, may want to move their equity into smaller and safer investments.”
“Buyers will hold off on real estate purchases weary of their job security.”
“Concerned the real estate values have peaked, interest rate increases will chase buyers away, and a weak economy will prevent buyers from buying, sellers are asking if it is the time to sell.”
“The younger generation watched the destruction of their parents retirement do to the real estate crash. They want nothing to do with real estate, happy to be renters and simply enjoy their lives.”
“The new generation has seasoned stock options and investments. Worried over the safety of these investments, they will return to the traditions of real estate.
“Sellers will hold onto to their property as of buyers continues to drive prices up.”
My BIG TIP? Don’t take stock tips or any short cuts with your future. Do your own homework. Use a calculator. It doesn’t matter who is to blame. Your life is based on your decisions. Make decisions based on financial common sense. Stocks have many indicators – ignore them and say hello to the sharks. Buy a house to call home, a place of your own, to be in control over your housing expenses, to raise kids and for them to call ‘home,’ flowers, pets, a place to use in your retirement. Stop pretending to be and investor or speculator, and be a home owner.
You may ask the common question about your real estate holdings: should I stay or should I go? Please look for the next article I am working on called: “Real Estate Roller Coaster.”
Is real estate safe?
Will real estate continue to go up?
Will real estate go down?
Should I sell my house now?
“Why fool around with realtors that don’t understand the complexities of Marin real estate. Mike’s experience can make a big difference when buying and selling. He has smart clients who rely on his expertise and trust his advice. He has made a lot of money for a lot of people.” L. Nibbi, Investor/developer
When asked who he works for, people are expecting him to say a real estate company. Michael Williamsen’s patent answer: “I work for my clients, the company I associate with works for me.”
Would YOU like a no-cost, free, no commitment or obligation chat about YOUR real estate thoughts with Michael Williamsen? YOU can reach him at
Michael Williamsen, Real Estate Broker # 00839110