On Monday, August 24th, the stock market opened and proceeded to drop over 1000 points in large part due to concerns over China’s slowing economy. Over the course of the day, it rode a rollercoaster of investor anxiety rising and falling before finally settling at 588 points under what it started during the trading day. It created a round of tension—and even panic—that was felt throughout the entire economic world, and America, with its close financial ties to China, is not immune to the same sense of changes being in the wind.
However, as the old saying goes, in the Chinese language, the word for crisis is comprised of the words danger and opportunity, and the same applies to what’s happening with the stock market now, and how it can affect real estate.
On the downside, depending on the nature of stock market crisis, it can have profoundly negative effects on real estate. America learned this lesson harshly back in 2008, when the “housing bubble” collapsed and real estate prices plummeted as a result of bank and investor mismanagement on home loans. During that period homes that had been over evaluated suddenly normalized, causing home buyers to lose out on a massive property investment, while some home owners who had borrowed beyond their means were caught up short in the property collapse and couldn’t keep up payments, causing them to lose their homes. It was sobering lesson to the entire country about playing with mortgages and investments with too much casual confidence.
Now we see another stock market crisis looming, only this time, the effect is centered around China, the second largest economy in the world, and the impact its struggling financial situation is having on the rest of the world. In this instance, a global economic situation affects every nation, including America, but this time, China is ground zero for the crisis, not America’s own real estate market.
This means that in this situation, the old stand-by about property being the safest investment still holds true, and it’s something that many of the wealthy in China are taking advantage of. Despite the turbulence of their own economy, purchasing property—especially in America right now—has a safe return on investment as real estate continues to appreciate here. And this doesn’t just apply to foreign investment buying up homes and condos on American soil, local investment also benefits a lot from the reliability of real estate in a volatile market.
SuzanneDranow.com is always aware of the fluctuations the market can have on real estate, and we keep a close eye on developments in both fields. Business is all about change, and having the courage to take advantage of the new opportunities that come with it.