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Will stock market flop hit luxury home sales?

NEW YORK – Sept. 14, 2015 – Observers worry that recent stock market negativity could affect America’s upscale housing market. They believe real estate investors will simply take a wait-and-see approach to ensure it is just a temporary correction – but if the slump is prolonged, luxury homes sales will likely slow.
A stock market flop “has two different levels,” explains National Association of Realtors® (NAR) director of housing statistics Danielle Hale. She says some prospective buyers will “leave their current investments alone and avoid any new investments,” while others “look to real estate as relatively less volatile than stocks, so they might increase their investments in real estate.”
Hale believes the “decent buying momentum this summer” will continue due to economic and job market improvements. She says sales in the $1 million-plus segment “have been doing quite well.”
How much money foreign investors are willing to spend will determine whether current growth rates are sustainable, especially since foreign buyers accounted for 4 percent of resales and 8 percent of total dollar volume during the year-over-year period ended in March, according to NAR.
China’s stock market woes could also impact Chinese investment in U.S. real estate, FNB Securities analyst Joel Locker says.
“You might go buy a second home in New York or Los Angeles when the stock market is going good because you have more discretionary income to spend,” says Locker. “When the market falls, that same amount of discretionary income isn’t there anymore.”
Source: Investor’s Business Daily (09/11/15) P. A10; Cariaga, Vance
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Source: Florida Realtors Feed

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