What the Stock Market is Telling Us About Future Housing Prices


There’s a lot of general anxiety that comes with talk about two significant areas of investing: stocks and the real estate market. But, most people believe that the two don’t overlap. The truth is that each affects the other, that they coexist and over time, provide an equal impact on American lives.

How can the stock market affect your real estate investments? The stock market can change housing prices through tangible areas such as finance, as well as the feeling of confidence.

The Finance Industry

Future housing prices often change in response to homeownership rates, lending practices, and mortgage rates. These aspects can help drive consumer decision making, and how realtors, as well as lenders, close deals. Because these factors rely on other areas of finance the stock market is a good predictor of what the housing market will have in store for you.

The areas of the stock market which require close attention include real estate investment trusts, and real estate focused public companies. These include Redfin, Zillow and Re/max which can fluctuate greatly over the course of a month.

Investors who deal with a fix and flip loans should regularly watch the stock market to take advantage of the economic changes quickly.

Consumer Confidence

As you’re buying, there’s a lot of concern for every aspect of your finances. Typically, as you’re buying a home, this is the point where people are careful not to open new credit cards and control their spending. At this point, consumers are almost always closely watching the economy and will quickly become suspicious.

But, the stock market can tell you what the future of housing prices holds even as your buying a home. The stock market affects investments including housing prices through consumer confidence in the economy and real estate.

Consumer confidence can lead to people dropping out of deals or holding off on purchasing until they feel more comfortable. Low consumer confidence can make a market go stale or drop prices after too long. But, high consumer confidence can raise the housing prices in the area.

High consumer confidence that raises housing prices creates a “buyer’s market.” All of this stems from the ebb and flow of the stock market.

What This Means for Buyers

Whether you’re looking to invest in real estate or purchase your first home, you should keep a close eye on the market in the months before you make your purchase. The stock market can help you negotiate lending rates, negotiations, and build confidence.

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