It's time to question where the national housing market is going. For the past couple of years, it's moved towards a buyers' market as unemployment has been reigned in, the stock market has grown, and the economy in general has slowly improved. That all comes into question with the recent dramatic swings of the stock market.
Baby boomers still have much of their retirement funds in the stock market although they have been moving away from it. Volatility in the stock markets is going to resonate through the economy. Consumers are going to lose confidence. Many of the millennium generation are depending on help from their baby boomer parents to come with down payments. The millennium generation has been slow to enter the first time homeowner market as it is. A questionable stock market as a source for down payment funds is going to slow their move down even more.
The surge in home prices in recent years is likely to soon slow down or even come to a halt. Hopefully, there won't be a reverse in home prices as a similar correction that the stock market made this summer. That's what happened to the housing market back in 2007. The housing market went through a correction after many years of rapid appreciation. As investors, you should be asking yourself if this is the "new normal". Will the real estate market now follow the stock market and correct itself on a regular basis?
Places like NYC, San Francisco, Seattle, and Los Angles, have seen residential real estate prices skyrocket the past few years. Way beyond what the average buyer can afford even when buying up with plenty of equity. What is that going to do to first time buyers or those that are starting families and need a bigger place? Consumer demand for housing fell for the fourth straight month, according to Redfin, a real estate brokerage.
The Greek government default on international loans, the collapse of the Chinese economy, and low oil prices are here to stay. The remaining question is waiting to see if the Federal Reserve is going to raise interest rates as they keep saying. All of that is going to sap consumer confidence and their life savings. Most likely, what is a seller's real estate market today is soon going to turn into a buyers' market going forward.
As investors, a buyers' market is normally a good thing as long as you aren't depending on appreciation to bring you profits. You make your profit when you buy. Not when you sell. A buyers' market could be opportunistic for investors in the not to distant future.
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Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest.