It has been on the news all day today, if you awoke this morning and follow business... stock markets around the world are in total turmoil. The "R" word for recession is leading the stock parade much lower. How do you feel it will impact real estate? The stock market futures for tomorrow portend a much lower open. For those that have not witnessed these stock plunges in the past...they do have an impact on real estate fairly quickly. Such market corrections of stocks spill over into real estate because it is the disposable income that fuels upper end purchases, and consumer confidence tugs away at the bottom! People become more dollar consious, and worry about their jobs.
A bear market can be defined technically as a stock market that asa whole trades an average of 20% lower than the peak in the market index. In 2002 the stock market Dow Jones Industrial Index moved a full 27% off the peaks in price. Our current DJIA market hit a peak of 14,198.09 in October 2007 and is now 14% off that peak and trading in a range of 12,099.30 with Dow Jones Futures pointing to an open 4.5% lower which would take the market to +/- 11554.83. That is below the range the DJIA has traded in the 12000 for almost 5 years.
Since the US is not on the gold standard, our worth is called "Fiat!" The dollar is worth what you believe it is worth or is based on consumer sentiment. If your saving portfolio dips substantially you are less likely to go out and make a big item purchase. This will affect the upper end sales more than anything. Yes interest rates and mortgage money may be very affordable in the coming months, but buyer apprehension may tighten sales further. This happened in all of the last major moves if the stock markets. In my own life the quickest comeback of the markets was in 2001 - 2002. Our real estate business was impacted, but our business did very well. There will be an impact on real estate in the coming months whether we like it or not, but I would love to hear your comments and assessments. Since real estate as a whole is already suffering the impact will be like waiting for the other shoe to drop.
Tomorrow should be an interesting day on Wall Street, but how will it affect us in Real Estate? Who will it impact most? Bulls are optimistic the market will rise, and Bears will bet a market will decline because it is overpriced.
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Well according to that formula, real estate is already in a recession. I am referring to the broader effects of the stock market decline spilling over into real estate and impacting real estate further.
It's just come to me in the past few weeks that the greedy traders, hedgers manipulators, securitizors (new word), etc. are probably at the bottom of our problems. Had they not invented the largely secret market for securities in real estate backed paper, we might not be in the mess we're in.
It appears that tomorrow could be pretty bad.
Who knows? Who cares? That avenue has been uncovered and as soon as the politicians finish their grandstanding and moving money around, the market will settle back down.
I'm glad the dealers, investors, hedgers etc. that played the mortgage game are being hit hard. They deserve it.
I believe the Stock Market and Real Estate Market are very interconnected!
Not a great or happy time to be on the sales side of the real estate market.
It's a Great time for INVESTORS!
Cheers, KIM.
I agree it is their turn! Their greed caused a lot of our current ills in real estate. With Securitized Mortgage Instruments, Collateralized Mortgage Obligations CMO's they peddled worthless and fraudulent all around the globe as high interest notes. It is nothing more than fraud and greed at its worse! Tomorrow should be an interesting day.
Mark Horan PA Keller Williams Kissimmee, Florida Thanks! I agree with your comments!
I also believe there are more reasons for this than just rising fuel costs due to the price of a barrel of oil. There is usually a straw that breaks the camel's back..., and in that sense...oil prices was a major push in that direction. Another item was housing and real estate. These collateralized mortgage obligations which were absolute fraud were sold around the globe! Useless worthless notes with no chance to repay. If I look at foreclosures in Atlanta whom do you believe the biggest holder of foreclosures are? Deutche Bank! It is a suckers rally that they sold off garbage to persons that trusted the value of US securities, and they were taken advantage of.
Northern Rock the Bank in England did not have a run on the bank and almost fail because they had bad builders or they had speculated in British real estate...they were holding worthless CMO's sold to them back by worthless US mortgages!
So overseas, the sell-off is also reflecting a total lack of confidence in the ability of the US to set things right! Most of the persons in Active Rain believe that to talk about anything real like this is just negativity. It isn't, it is far worse than being pessimistic.
shtMark Horan PA Keller Williams Kissimmee, Florida Thanks I agree, I also just posted the most recent statistics for Atlanta this evening. The numbers really cannot get much worse!
http://activerain.com/blogsview/347625/Atlanta-Georgia-Real-Estate
It does look like a tough day is going to happen. I think that it does effect the Real Estate market. Everyone tightens there belts!!!
your friend in Charlottesville