Friday, July 16, 2010


  This is a question a lot of people ask about and have their own perceptions of. Although they are both measures of the economy in their own ways, the fact is that at many times the real estate market can be very good while the Dow is in a "bear market" and vice versa. However, when you have a collapse like we had in fall of 2008, it will mean that people have lost a lot of their net worth which may have been used to purchase real estate and that will have an effect primarily on higher end real estate sales and commercial real estate. It may also have the effect of dampening consumer confidence because the ups and downs of the Dow are an every day item posted in the news.
  Real Estate is more prone to be affected by things like interest rates, lending practices, employment rates, demographic trends and other items. Real estate markets also tend to be "localized" so that just because it may be very bad in Phoenix AZ, as long as interest rates and lending practices are good, the market here or elsewhere could be thriving or at least stable. Conversely when the DOW is having a bad day, the stocks of very profitable and healthy companies will be affected by the ones that are the primary cause of it.
  At this time, many people have liquidated their stock accounts because of the volatility of the stock market and went into real estate as a more tangible investment.

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