The slumping stock market used to be given as a reason for the great real estate boom. The dot-com bust soured Mr. and Mrs. America on stocks. And so they shifted their commission dollars from Merril Lynch to Century 21. In the past year though that trend has reversed. The stock market is roaring and housing is in a funk.
The National Association of Home Builders initially took some of the wind out of the stock market today, announcing that its index of builder sentiment had fallen back to its lowest level since the housing slump began last year. “Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead,” said association president Brian Catalde. But the stock market shrugged off the news. The Dow Jones Industrial Average closed at a record of over 13,400.
The National Association of Realtors also released some numbers today. The Realtors tried to put the best possible face on its results. “First-Quarter Metro Home Prices Stabilize” read the headline. In reality, existing home sales slid 6.6% in the first quarter. “It appears the worst of the price correction is behind us,” association president Pat Combs said. She was referring to the fact that more than half of 145 cities tracked showed price gains in the quarter. But nationally the median price of an existing single-family home fell 1.8% to $212,300 in the quarter.
The stock market’s gain seems to be housing’s loss.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.