Wages, Not Housing, Source of Market Speculation
Last week, the Dow fell 665 points in a single day, a number it bested (or worsted) to open this week, with a fall of another 1,1100 points. Experts immediately began looking for the source of what is still being called a 'correction', looking at influences ranging from political uncertainty, interest rate speculation, and a housing market that is seeing its growth slow for the first time in years.
From out-going Fed Chair Janet Yellen to a number of talking heads, the Dow's downward tumble may have been caused in some small part by rumors of an "overcooked" housing market, but many agree that real estate factors have played a limited role, at most. The same rumors of an overvalued stock market, combined with speculation of the next move by The Fed all contributed, and there is little to fear in the long run in housing.
According to Forbes and other sources, just how the treasury handles the future of higher wages will dictate everything from interest rates to investments, and those changes may come sooner than anticipated. Investors are essentially waiting to see if the Fed views increasing wages as healthy or as signs of inflation, and to see just what measures are put in place to counteract inflation.
Inflation has hardly been on anyone's mind for nearly three decades, but measures to combat it often include changes to interest rates across the board, including from centralized banking institutions. With international competition slowly (most notably from China), there are fewer barriers to growth, and concern is that inflation could be hard to control in the shorter term without some way to 'pump the brakes', as it were.
There's no reason to think these corrections will have an immediate impact on individuals and families making real estate purchases in the next few months. More importantly, realty is always local, and region-wide supply and demand have a far greater impact on home pricing and rates than any other factor, even when compared to the weight worlds of international stocks.