It seems to me that every asset class has it's day in the sun.  I've been actively following this cyclic activity since the early 1970's.  Let's see....there was oil, then precious metals, then bonds, then real estate, then commodities, then a long bull market in stocks, then a phenomenal run in Real Estate, then the continued run in stocks......until recently.

Of course, the Real estate market has slumped (at least), if not tanked in some areas.  The Cape May County market where I work is a special situation.  The multi-year  run up in prices was supported primarily be investors (i.e. speculators), as well as second home buyers.  When these sources dried up due to over inflated prices, the market virtually stopped.  This left a 3 year supply of inventory on the area barrier islands.  

There have been some positive signs since the beginning of 2007 and many of us are hopeful of a decent spring market.  However I'm wondering if the recent malaise involving the financial markets will cause investors to rethink their strategy. 

Realistically, there has been an uninterrupted multi-year bull run in the stock market.  Suddenly, the media is signaling that the end of this cycle may be at hand.  The end result is that investors are always seeking to diversify their assets, taking profits from one part of their portfolio and diversifying to another asset class.

This may bode well for investment properties at the Jersey Shore.   Those who have been on the sidelines for the past 2 years have seen their stock portfolios appreciate by 35%. Meanwhile, the new construction on our barrier islands has dropped in value by an average of around 20%.   Maybe the savvy investors will begin to take some stock profits and turn them into Real Estate investments at the shore.