VIDEO- Why Are The Stock Market and Real Estate Market Out of Sync?


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This month I try to answer a big question: If the stock market is at all-time highs, why is the real estate market flat-to-down?  This is perplexing for lots of people.

It’s an interesting question.  Sellers are frustrated because they want to achieve the highest price possible, and historically, the real estate market is up, in sync with the stock market.
In this case, massive gains in the stock market in 2017 may or may not be translating to huge bonuses for this potential real estate buyers in Finance.
Second, some investors choose to keep their money in the market rather than buy real estate. If there’s a perception that housing prices will fall, they certainly don’t want to overpay. Different buyers have very different views on timing the housing market; we are seeing some buyers diving into the market already who think timing is good- These buyers have cashed in a few chips.
Will we see a bunch of bitcoin profits propping up the housing market?  Don’t be so sure.
All of that said, unfortunately, sellers often do NOT want to hear about market realities.  As someone put it, “Sellers are always the last ones to know.”  I’m not sure that’s definitively the case, but certainly sellers are the last to admit what’s going on.
I tell sellers that I don’t make the news- I just report it.  I covered the tax plan and my concerns, last month.  As time passes, we will see if the fear is overblown.  For those buyers who think the market is going to dip 15-20% from the top- They need to recall that prices dropped, at their worst, 25% from peak to trough during the worst recession in 80+ years in 2008-2009.  Prices will not drop as far as they did then.
For now, buyers want to see lower prices, and are adjusting to new mortgage rates.   Sellers don’t want to leave money on the table. Would you?
This dynamic makes dealmaking quite dangerous and demanding.
In the end, Overpriced listings just aren’t taken seriously.  And yet. we remain in a market that is structurally Sound.  As long as prices are right, properties sell.  We’re still seeing bidding wars, multiple bids on well-priced units, and unfortunately only a trickle of inventory yet coming to market.  As we approach Spring, we will see more opportunities- and hopefully at more realistic pricing.

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