1000 points in Dow equals what percent of home prices?
I wonder if it is possible to equate home prices to the Dow Jones Industrial average. It would be interesting to plot the two against one another.
If rises in the Dow correlate to rises in US home prices, then one would think that declines in the Dow could correlate to housing busts. How much would home prices be impacted if the Dow were to fall to 10,000? What aboutt 8,000?
I can't imagine that we could see the Down fall below 10,000 without a further weakening of real-estate. Stocks do poorly when the economy is struggling, and it would be hard to see how housing could appreciate if the economy was under stress.
If rises in the Dow correlate to rises in US home prices, then one would think that declines in the Dow could correlate to housing busts. How much would home prices be impacted if the Dow were to fall to 10,000? What aboutt 8,000?
I can't imagine that we could see the Down fall below 10,000 without a further weakening of real-estate. Stocks do poorly when the economy is struggling, and it would be hard to see how housing could appreciate if the economy was under stress.
Comments
Prior to the speculative stock and housing bubbles, it's entirely possible.
housing markets are far less volatile than stocks, so it's really not such an interesting chart IMHO
To see a comparison of how the S&P 500 outperformed the real estate market in the ten largest metropolitan areas in the U.S. since 1980, click here.
Hmmm... Maybe this chart just doesn't go back far enough? It would likely take a sustained drop in stocks to show a visible impact on home prices. The 1930s, for example, saw both stocks and homes fall in value. The stock crash of '87 wouldn't likely register in housing because it didn't last long.
I still think it is hard to imagine a sustained serious decline of either real-estate or stock prices that didn't blead over into the other sector.