Capital markets reflecting real estate?

1 Reply

The stock exchanges are reaching all time highs, and many are expecting financial crashes any time. How long after a financial crash should we expect to see the seeds of discord affect the Real Estate market? Will the impact be instant?

@Zack Bloom Stock markets are reaching all time highs, however I don’t think that means there is a crash among us. What are the reasons you think there may be a crash?

I am bullish on the market due to the health of the economy and growth the country has been experiencing. The tax bill being nearly signed into a law also means there will now be be an estimated $1 trillion stimulus pumped into the economy via federal corporate tax cuts from 35% tax rates to 21%.

Boom and bust cycles do tend to occur every 7 or 8 years, however there are many indicators that this bull market is nowhere near over. Real estate values also show alignment with boom and bust cycles, but nobody would be able to say that there is, for example, a 2 month lag between real estate markets and stock markets. The last market crash was highly correlated to real estate largely due to the misuse of CDO’s, but if another crash occurs it may not neccesarily be caused by real estate and thus have massive impacts on real estate markets like it did in 2009.

In additon, real estate is a huge winner from the tax reform that was passed by the GOP today and this also points towards more aggregate gains for real estate investors. In short, I think if you are worried about real estate values fluctuating, look to invest in the largest markets that have significant history of high job and population growth. These markets would be the most resilient for real estate investments through any kind of economic swings. My company invests in:

-Chicago
-Denver
-Houston
-Austin
-Dallas
-Atlanta
-Raleigh
-Charlotte

Vince

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