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Stock Market on a Sustained Rally. Will this effect home prices?

By
Real Estate Broker/Owner with Crossroads Real Estate LLC

I don't know what is happening with the stockStock market and housing market over the past 2 weeks, but my stocks have gone up 35%.  Can you imagine that, 35% in just two weeks.  What if the housing market began to see increases like that?

The Greater Milwaukee housing market saw five straight years of 8% price increases in the housing market from 2002 to 2006.  The average price of a home shot up almost 50%.  A home selling for $100,000 in 2001 was selling for $146,000 in 2006. 

What most buyers do not realize, is how prices shift in the market from season to season.  Looking at only the statistics shows only a small portion of the picture.  The 8% price increase is averaged over a one year period. 

Most buyers are active in the spring.  Between 2002 and 2006 the market experienced an average price increase of 15%.  On a $100,000 buyers were spending $15,000 more because they purchased a home between April and September.  Prices between October and March slowly fell during that period.  Many more homes sold between April to September, so to reach the average of an 8% for the year, homes selling between October to March sold for prices with little, or no increase, to actually less than the previous year. 

The lesson is, prices are consistently lower from October to March.  Why do you think this is the period most investors add to their inventory?

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Bryan Robertson
Los Altos, CA

The increased stock market activity is driven by a number of factors including improved jobs, increased corporate profits, and better general real estate activity.  The surprise uptick in September is not really a surprise.  I expect we'll see more buying than usual going into the end of the year.

Oct 13, 2010 05:25 AM