Recently, the stock market has been on a roller coaster ride with very little climbs and too many drops to count. This past Monday, the market took nearly a 1,600-point (4.6%) plunge, and according to CNN Money, “it was the biggest point decline in history during a trading day.”
But, what exactly happened?
Last week, the Dow Jones Industrial Average slipped 1,800-points (7%) before climbing back up 237 points, putting a big scare in the minds of investors who have their hand in American Real Estate and wondering if this was the start of another housing bubble burst. Analysts and economists have determined that the dramatic decline is most likely due to worries over inevitable inflation brought on a rapidly accelerating economy that could prompt the Federal Reserve to raise interest rates sooner than expected. Nancy Lulejian Starczyk, president of the Southland Regional Association of Realtors in California has stated, “The only concern is rising interest rates. This limits the buyer. The perception is that that economy is doing exceedingly well. Consumer confidence is high-- this makes real estate in our region continue to rise in value.” I’m sure we all remember just a couple of weeks ago, on January 26th, the Dow Jones Industrial Average shot up 223.92 points. In that respect, a correction was definitely looming.
What is a correction?
A correction is defined as a 10% percent plunge from the last market high. The market closed at an all-time high less than two weeks ago at 26,616 points. This past week we saw a decline of 8.5% with a massive plunge this past Monday. These are drastic highs and lows in such a short time, which is certainly a cause for concern, right? The National Association of Realtors Chief Economist Lawrence Yun has an interesting perspective on the matter, “Even with a stock market correction, it is still way ahead compared to what it had been two years ago. It’s been such a strong run up that it was inevitable there would be some kind of correction, but I think this is a healthy correction given the metrics of the stock market, so whether people view this as a correction or there is actual panic and has an impact on confidence it remains to be seen.” Yun has offered a somewhat comforting response to the havoc the stock market has witnessed in the last week, but it still has some in a state of absolute uncertainty. The VIX Index, otherwise known as the “fear gauge”, which is designed to measure overall volatility in the market, shot up to its highest level since 2009. Regardless, if this impact is real or psychological, people are concerned, and rightfully so.
Publicly Traded Real Estate Brands
Real Estate Brands like Re/Max, Realogy, and Berkshire Hathaway have all witnessed the effects of the stock market within the past week. As of February 1, Re/Max stock was trading at 49.30. Today, Re/Max is sitting at 45.65 with a 7.4% drop. Realogy as of the beginning of the month was at 27.4 and today it is at 24.95, seeing a 8.9% drop. Warren Buffett's company, Berkshire Hathaway, was trading at 325.900 on February 1. Today, it is trading at 299.950, which is a 8.0% decrease. These are some notable names in the industry that have all seen radical drops in the last ten days. This is a cause for worry and if this market hiccup is truly more than a psychological impact, it might be smart to consider an Unrefuted Real Estate Brand for your real estate needs…
With all this UNcertainty, ONE thing is Certain
Realty ONE Group is a privately held, family owned, 100 % debt free company that does not adhere to market trends. Realty ONE Group has carved its own path of success and as CEO Kuba Jewgieniew has said, “We don’t answer to anyone!”