A widespread sell-off in tech stocks began Tuesday, September 1st, and it’s ramifications have reverberated into the week it precluded. This comes on the heels of record stock performance, particularly in the tech market, since the temporary recession experienced in March of this year. The guiding question of, “Why?” and it’s implications on today’s mortgage & housing market will be discussed in the following:
Following any spurt of rapid or exponential growth in a given market, stocks typically revert back to the mean of their expected growth patterns. As governmental regulations surrounding Covid-19 have forced consumers indoors & away from public areas of commerce, online shopping & interaction have been at an all time high. Simultaneously, businesses are forced to support work-from-home trends with their employees, increasing bulk purchases of digital hardware systems. As a result, stocks like Apple, Amazon, and Microsoft saw an expected initial drop, then rapid rise to all time valuations. As any pendulum swing occurs with added force, the reverse course is expected to occur in a similar fashion.
How this affects the Mortgage & Housing Market:
Playing the stock market is seen by most to be a volatile investment strategy due to the lack of control any given consumer has on the outcome of their position. Homeownership & real estate investing does not fit in that category. As previously discussed in the past blog post, the housing market has seen a great increase in demand for homes as people are forced to spend the majority of their day’s in their living quarters. That demand has not been affected by temporary fluctuations in the stock market. If anything, the wanting for a more stable investment will lead consumers to shift money from the stock market, and into something tangible like gold, or a house. The secondary mortgage market will, therefore, see another pop in trading of securities.
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