16 Jan Housing Prices and the Stock Market
The U.S. stock market continues to climb higher once again this morning, as what seems to be more of a technical rally higher continues. When you look at the current economic environment, it’s surprising that we haven’t yet seen a significant flight to safety where investors sell stocks and flee to the safe- haven of the bond market. Between Brexit falling apart, significant economic weakness in China, and a federal government shutdown that is now in its 25th day, there is significant reason for investors to panic. The fact that they seem to be shrugging off all of this negative information tells me that the stock rally is highly influenced by the technical.
According to Redfin, Home Sales slumped in the month of December and price growth fell to a 6-year low. Of course, the month of December is always slow, so that can be explained away. The concern will be the potential correlation between home values and the U.S. stock market. When stock prices fall dramatically, it causes many people to reconsider making large purchases. If we see a more dramatic downward move in stocks in 2019, how will this impact the housing market? Many are starting to realize that a recession isn’t far away. This needs to be considered for those making the decision to upgrade. Downgrading a home makes more sense during a recession. Buy low and sell high.
There is very little reason not to lock at the moment. Therefore, we will maintain a locking bias.