Last week I asked all of you: Do you think there will be a major stock market reset in the next 12 months. The real estate pros have spoken, the majority think (70%) think that the stock market is due for a major reset in the next 12 months. What would a major stock market reset mean for real estate?
What happens to real estate prices when there is a stock market correction?
If there is a major reset in the stock market, there likely will be a large drop in real estate prices as well. Currently the higher end properties are holding up well due to the “wealth effect” of stock market gains. The inverse is also true, if the stock market falls real estate prices will also fall. The interesting question we can’t answer is how much will real estate prices fall and when?
What do real estate pros predict for a stock market correction?
In the comments there were some primary themes including inflation, deficits, too much enthusiasm, etc… Many readers also highlighted the large amount of different factors like above that will ultimately lead to a correction. Below are some of the best comments:
- There’s been a lot of hand wringing about the markets but no real mania…yet. These things tend to end in a bang not a whimper. Haven’t heard “I’ve got to get in” which is usually the tell tale sign of a bubble. But we’re a lot closer to the end than the beginning of this cycle, so definitely more volatility to be had.
- The current stock market, the national debt, federal incoming tax payments, as well, as local folks I speak with also believe a downward adjustment in market and housing values will happen in the end or during the 1st-2nd quarter.
- I am not seeing where the catalyst for major reset comes from. Although debt levels and default rates are rising, much of this is in private hands which will hit institutions and private funds rather than main street.
- Hi – thank you for your blog, I enjoy reading it every time you post. I am thinking the stock market will fall and I have recently sold a large chunk of my stocks, however I hope we are both wrong. Thanks, Greg
- I’ve been saying there will be a major market reset for years, so eventually I’ll be right! Just not sure what it will take to flush out all the buy-the-dip speculators. On that note, I ponder if future bear markets will be very short lived given that “investing” has become such an opportunistic sport.
What happens to real estate prices in a stock market correction?
The survey respondents quickly keyed into the underlying issues including deficits, market exuberance, etc… . In every economic cycle, higher rates ultimately lead to a market correction. The two questions we don’t know the answers to yet: 1) when will this occur 2) how much will prices decline? Unfortunately the answers to these two questions will depend on how the market unwinds. With that said, it is important to note that it could be another year or even several years before there is a correction, the good times always seem to last longer than anticipated but ironically always happens faster than anticipated once the ball gets rolling.
As always, thank you everyone for your participation in the survey and invaluable insights. Also remember on future surveys if you include your name and a website and I select your comment I’ll put a link back to you. I appreciate everyone’s insight 😊
Additional Reading/Resources/ other survey results
- https://www.fairviewlending.com/interest-rates-rise-stocks-rise-real-estate-flat-how/
- https://www.fairviewlending.com/federal-reserve-raises-rates-yet-mortgage-rates-fall-why/
- https://www.fairviewlending.com/is-your-credit-score-useless/
- https://www.fairviewlending.com/interest-rates-jump-again-are-they-going-to-decline/
- https://www.fairviewlending.com/rates-make-a-u-turn-should-you-panic/
- https://www.fairviewlending.com/will-mortgage-rates-fall-in-2026/
- https://www.fairviewlending.com/where-should-you-invest-in-real-estate-in-2026/
- https://www.fairviewlending.com/fed-drops-rates-why-did-mortgage-rates-barely-budge/
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends 😊. I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
