There’s no doubt that you’ve heard the news about the significant crash in the Chinese stock market earlier this week. Just because the market is halfway around the globe, doesn’t mean that the U.S. markets are immune — specifically, as seen by the Dow rapidly losing points and ending at a loss with around a 1,000-point decline. The global housing and stock markets are actually intertwined in many different ways. While mortgage interest rates were recently expected to go up, the market dip has caused rates to stay low. Your stock portfolio could be in shaky standing, but depending on your financials, this might just be the perfect time to invest in various real estate markets.
Major home builders’ stock shares are traded in the New York Stock Exchange (NYSE) on Wall Street and through the Nekkei index (a stock market index for the Tokyo Stock Exchange in Japan). Home improvement companies that are tied to home building and renovation purposes (like as Home Depot and Lowes) also trade on the stock exchanges.
Bank stocks could drop further as interest rates are set to increase. Combined with a falling stock market, this could call for caution in lending and credit tightening.
Housing and the stock market are both leading indicators of economic trends. So far, the housing industry hasn’t been affected by the recent tumble in stocks. However, several industry professionals including furniture suppliers, construction tradesman, and more are all dependent on the ways construction materials and costs fluctuate within the stock market.
As the value of stock portfolios increases, investors could divert other investments to diversify their holdings — real estate is certainly one alternative.
According to ABC-WFTS Action News Tampa Bay, interest rates have dropped below 4 percent when just last month, the interest rates were about 4.25 percent. Here’s how costs could break down in real terms: If someone bought a $250,000 home at 4.25 percent last month, their mortgage payment would be $1,230 per month. If they locked in at 3.75 percent right now, that payment would drop to $1,158, a monthly savings of $72. When spread out over a 30-year repayment period, the total interest rate savings would be close to $26,000.
American families will possibly purchase second homes or lock in current prices and rates by purchasing land with the intent to build on it at a later time. If the stock market continues to fall, it is likely that real estate prices would eventually lose their momentum and possible start to decline. Some of the biggest real estate investors within the American housing market have actually been the Chinese. If the economy were to continue to struggle in China, there could possibly be a buying freeze or even a rush to sell off assets in the U.S. for more favorable safe-haven investments like treasury bonds.