Housing Market – Stock Market Linkage
Economic observers — and readers of this blog — know the dynamic well.
Namely, melting stocks precipitate a flight to safety (bonds), which drives down interest rates . . . helping home sales (at least in the short run).
In fact, just such a sequence played out this week, when stocks — and the tech-heavy Nasdaq in particular — took a 3% to 7% hit.
Effect on interest rates?
Thirty-year mortgages for the best-qualified borrowers fell from mid-four’s to low-four’s.
Of course, any housing market “pop” presumes that the stock market damage is contained and short-term.
A full-blown swoon — presumably because of cloudier economic prospects — is decidedly not good for the housing market.
