For the last month it seems like everyone who called me was complaining about the stock market because their assets kept going down in value.  I’m so excited to see that we have had about eight or nine days of good news in the stock market – I think that has a positive influence on the overall real estate market.

I have had people ask “why does that affect the Hilton Head real estate market”?  It is simple – the most important factor in real estate is consumer confidence.  In other words, when people feel good about their net worth, they are much more likely to go out and buy real estate – especially secondary resort real estate in places like Hilton Head Island.  When people feel bad about their net worth, they are less likely to spend for those “extras”. 

It is my hope that the stock market has bottomed out, prices are up and I think we will see a corresponding trend and increased activity in real estate.  There have been a lot of people sitting on the sidelines waiting for the right time to buy – this may be it.

Wow, the stock market dropped 4% yesterday.

Stock market values affect real estate values, even though not directly.

It has been my experience that people buy when they feel good about their investments and are more cautious when they do not feel good about their investments.  7 out of the last 8 days the stock market has dropped and there was another big drop yesterday.  This probably means that now is a pretty good time to buy.

I wrote an article once “When will history really teach us a lesson” – in this article I talked about how the people who bought in 1991 when every single indicator said not to buy real estate, are the people who came out big winners.  I think those indicators are here today meaning it is a great time to buy.

Consumer confidence is a funny thing.  When consumers do not have confidence in the economy, the economy slows down and real estate prices drop.  We have some unbelievable real estate deals today and now might be a good time to shop around.

I recently had a prospect tell me that he thought the market had not bottomed out and he thinks it will bottom out in 6 months.  I told him that he was probably right, but the problem is that he is not buying a mutual fund of real estate – you are buying one specific property. 

There are some great deals available – take advantage of them!

Obviously Wall Street has been in the news recently and most of the things that have been going on have made investors leery of the trust factor (of Wall Street). 

Helping Real Estate

Obviously when things like this happen people tend to have more confidence in the real estate market then they do investments.  In the long run this will help people purchase more real estate even though in the short run we have been effected because people’s investments have been so low that they don’t have the money to purchase. 

People Believe in Real Estate

The advantage of buying real estate is that people get to make the decision them-self.   They pick out the property they like and they feel better about their investments. 

In the past, more people have invested in Wall Street because they felt these were “professionals”.  But the erratic behavior and dishonesty of several people have hurt Wall Street as a whole, even though there are bad real estate agents just like there are bad stock brokers.  Recently the bad stock brokers have been getting more publicity than bad real estate agents. 

Obviously the greed on Wall Street is bad for everybody.  I’m not saying I’m glad it happened but I do think it is going to make people more conscience that one of the best investments they can make is real estate.

Yesterday’s headline in The Island Packet stated “New Deflation Fears Hammer Wallstreet”.  Today’s headline read “Dow Free Falls as Unemployment Rate Rises”.  Wow – you would have to be crazy to purchase with headlines like that. 

That is my exact point – how much nerve do you have?  Are you willing to go against the flow because obviously the flow right now is anyone who would buy anything in today’s market has lot their everloving mind. 

If you look at historical data, it is those people who purchase at the times when nobody else is purchasing are the ones that come out smelling like a rose.  I think of it as - smart money is buying now. 

I recently listened to an interview with Donald Trump who I usually disagree with on most things, but I think he might be right on this.  If you are looking for a great buy, now is a great time to act.  There are several really good bank foreclosures on Hilton Head Island.  You can visit my Hilton Head Island Real Estate website and click on the “foreclosure” tab to get an idea of what is available in the market.  Remember – contrariness usually ends up winning in the long run.

When I was working out this morning at the gym I noticed the financial news and they said that the Dow hit a 5.5-year low yesterday and that new home construction hit an all-time low since they have been keeping records.  The question a lot of people are asking themselves is how this affects the housing market.

The commentator went on to say that there was “fear” and “uncertainty” in the market.  Those are two things that the housing market cannot stand.  When there is “fear” and “uncertainty” people often do not make decisions.  When people are not making decisions, that means there are less sales which causes prices to drop and therefore has a detrimental effect on the market. 

How long will fear and uncertainty remain in the market?  Obviously, that will remain until there is some reason that the public thinks that the market has stabilized.  It is my hope that this will happen soon because it is having a negative effect on property values.

(more…)

The stock market had another bad day Wednesday.  As I was watching the talk shows last night, people were talking about the market and what is going on.  My initial reaction is, how does this affect real estate? 

It has always been my experience that consumer confidence is the most important thing in whether people purchase real estate.  If they feel good about their situation, they are much more likely to make a purchase.  If they feel bad, they do not. 

I have often heard people say that should not matter because they are really not taking a loss because they are not selling the stock and hopefully it will go up. 

Still, if the market is down, many do not feel good about their net worth and they do not buy.  For example, if you have a fever of 102 and you are sick, you are probably not going to run in a 5K.  Even though you probably will not die and you probably will get better, at that moment, you do not feel like running a 5K.  That is the way it is in real estate; when people’s stocks are down they do not sell them, but they do not feel good about their net worth so they do not purchase 2nd homes and vacation properties in a resort like Hilton Head. 

It is my hope that the stock market will turn around because the sooner it turns around and has some strength and stability, people will feel better about the future of our country and will get out of this “financial meltdown” mode and purchase real estate.

There are many factors that go into the purchase of real estate and the overall strength of the real estate market.  Consumer confidence is one; which is greatly tied to the stock market.

Wow – what a week!  After 27 years of selling real estate on Hilton Head, I have never experienced anything like last week.  Huge 700 point swings in the Dow made buyers reluctant to purchase or sell.

There is an old saying in real estate that says “a confused customer never buys”.  Nothing could have been further from the truth last week.  We had fewer properties go under contract than we have had in quite some time.  Everyone continues to ask when the market will stabilize.  Unfortunately, my crystal ball is broken and I don’t know.  One thing I will say is that I think we need about 2 weeks of the stock market being stable so buyers will have confidence that things are not going to get worse. 

A friend gave me an example the other day.  He said the reason he felt like people were not buying was because they think prices are going to drop.  For example, if you are going to buy a car next week and someone told you that in 30 days they were going to have a special rebate program where you could buy them for less, you would wait 30 days too.  I think that is what is going on in the real estate market on Hilton Head.  There are a lot of buyers that have the money, they like the properties, but they are just waiting until the market bottoms out.

I will continue to update you on the market situation.