This Article On Stock Market Performance And How It Affects The Mortgage Markets Was PUBLISHED On July 15th, 2019
At the beginning of the recession in 2008, the stock market experienced a major drop in one day, 777.68 points in one day.
- We all remember the results of that, job loss, credit tightened, the housing market was significantly impacted
- So what about 2019 and the stock market performance?
- Are we seeing signs that we are headed for another economic downturn?
In this article, we will discuss Stock Market Performance And How It Affects The Mortgage Markets.
Stock Market Swings
It is not abnormal for market performance have periods in which it experiences large losses as a result of large selloff’s, but remember it is usually followed by large rallies.
- For instance, January and February had some very poor stock market performance, but by mid-March, there were again great rebounds
- So what about if the stock market drops more than 600 plus points?
- Well, let’s explore that for a minute
- Most investors knew that yesterday’s stock market performance would be poor and it was not unexpected
- If you wake up early and watch the news, it was one of the first things that were discussed on the national news before the market even opened for trading
- With the announcement of the UK exiting the EU, the global markets tumbled significantly the night before. This was not unexpected
- It is important to keep it into perspective
Investment advisors believe that we will likely continue to see some uncertainty and some sharp market declines over the next few months, the risk of another recession is relatively low.
Jobs Reports And Stock Market Performance
May jobs report was weaker than expected and that is typically what I pay attention to.
- If you have a weak job market and a sharply declining stock market, I take notice quickly
- However, May’s unemployment rate was reported at 4.7%, which also indicates that the jobs report was more of an abnormality
- I travel all over the country on a weekly basis for work and the common thing I hear is that employers struggle to find employees
- It is not limited to the geographic region either, it is nationwide
- Finding employees and even getting applicants is a large struggle
- Many employers are having to reach out to temporary employment agencies for the first time
- I have experienced where locations have called a temporary service for help
- The temporary service said that they couldn’t even find employees
- So, I don’t put a lot of stock in May’s jobs report because the fact is there are thousands of vacant positions nationwide that employers are unable to fill
- Additionally, wages are increasing due to employers needing people and paying top dollar to get good people
This helps prop up the economy as consumer spending increases as a result.
Stock Market Performance And How It Affects Housing Market
Today’s housing market continues to look promising:
- The upward trend of purchase mortgage applications has had a steady increase
- Housing prices have rebounded nicely
- Many people are eager to sell and buy a bigger and better home
- It is natural for people to get nervous about housing prices being inflated as they were prior to 2008
Rest assured, the mortgage industry became extremely regulated after the housing market crash and values are not inflated in the same fashion as they were previously.
So what does all this mean?
- It means people should not react and automatically assume the worst
- Keep your long term goals in sight and don’t readjust because it could be a volatile summer
- Remember that while seeing large market declines can cause some nervousness based on what we experienced previously
- But right now it does not appear that it should be a cause for panic
- Markets will ebb and flow like other aspects of the economy and it is normal to see corrections from time to time
- Do not be alarmed if the Feds adjust back the short term outlook for a bit while the world reacts to the news of the UK and the global market performance
- Most importantly, do not immediately log into your 401k accounts and watch on a daily basis
- This ends up causing unnecessary stress and reactions that could cost you in the long run
I will enjoy the summer sun and nice weather and choose not to focus on what the stock market is doing for now.
Information in this article is the opinion of the author and is for informational purposes only. Information should not be construed as financial or investment advice. For investment advice, please contact a licensed financial advisor.
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Gustan Cho is the Editor In Chief for Gustan Cho Associates Mortgage And Real Estate Information Center
Gustan Cho is a licensed mortgage loan originator who is an expert in originating FHA, VA, USDA, Non-QM, Jumbo Mortgages, FHA 203k Loans, Reverse Mortgages, and Conventional Loans. Gustan Cho’s passion is helping home buyers who had prior credit and financial issues realize their dream of home ownership become a reality . Gustan Cho realizes the challenges of securing a home loan when your credit is less than perfect because he went through the loan process with less than perfect credit. He was pre-approved initially to get a last minute mortgage loan denial after providing the mortgage lender she was dealing with everything they requested. Gustan Cho decided to get associated with a national direct lender that had little to no overlays, Gustan Cho Associates has of the tools necessary to help one home buyers at a time. We pride ourselves in having a 100% closing ratio. The Team at Gustan Cho Associates is available 7 days a week to take calls or answer emails on any mortgage-related questions you may have and can be reached at 312-716-8151 or text for faster response. Or email us at firstname.lastname@example.org.