Housing market should outlast the CaronaVirus
Remember the housing crash of 2006-2008? Of course you do. Are you concerned about the current correction in the stock market? It is a sign that home values may be about to tumble.
What’s happening today, however, is nothing like what happened a dozen years ago. The S&P 500 fell by over fifty percent from October 2007 to March 2009, and home values depreciated in 2007, 2008, and 2009 – but that economic downturn was mainly caused by a collapsing real estate market and a meltdown in the mortgage market.
Today the stock market volatility is being caused by the coronavirus with no connection to the housing industry. A lot of experts say that the current situation is much more reminiscent of the dot.com crash that was immediately followed by 9/11. David Rosenberg, Chief Economist with Gluskin Sheff + Associates Inc., recently explained:
“What 9/11 has in common with what is happening today is that this shock has also generated fear, angst and anxiety among the general public. People avoided crowds then as they believed another terrorist attack was coming and are acting the same today to avoid getting sick. The same parts of the economy are under pressure ─ airlines, leisure, hospitality, restaurants, entertainment ─ consumer discretionary services in general.”
Let’s review what happened to home values during the stock market correction in the early 2000s.The S&P dropped 45% between September 2000 and October 2002. Home prices appreciated nicely at the same time. That stock market correction did not have any negative impact on home values.
If what we are experiencing now is more like the markets in the early 2000s than the markets during the Great Recession, home values should not be affected greatly.