Exceptionally high volatility in financial markets has led Americans to doubt a recovery in the housing market is possible, at least for the time being, according to a new Housing Predictor opinion poll. Low confidence may be a sign of the times.
The just completed poll found that 72% of respondents feel that a recovery in the housing market downturn has been diminished by the recent volatility in the stock market. The New York Stock Exchange has been on a wild ride with 200 to 400 daily point swings in the Dow Jones Industrial average over the past several weeks as uncertainty among investors over the U.S. economy produced the wide gyrations.
The stock market has historically been viewed as a future gauge of the overall economic health of the nation. But the stock market’s use as a future gauge as an economic barometer may have changed considering that more than 75% of all stocks traded are now traded as short term trades rather than long term investments, and more than 80% of equity trades are also made through the use of sophisticated computer algorithms.
The computer trading may be hurting the markets fundamental use as a predictor of things to come economically as low consumer confidence over the housing market hinders a recovery.
The housing market has been in a downturn for five years in the hardest hit regions of the U.S. The remaining 28% of those who responded to the survey said that volatility in the stock market did not impact a housing market recovery.
Near record low mortgage rates and lower home prices haven’t been enough to trigger a recovery as high unemployment hinders any chance of a recovery for the time being.
Has volatility in the stock market diminished your confidence for a housing market recovery?
To see the previous poll results click here.