Stock market turbulence has recently rattled Wall Street, jolting what had been a period of steady growth.
If stocks see sustained stumbles—and in the absence of swift or severe enough interest rate reductions—housing sales could stall, especially in the higher-end real estate segment.The markets most vulnerable to a stock market downturn are those with concentrations of luxury homes and high-value properties.
“If there are folks using stocks to purchase homes,” McLaughlin explains, “they might have to delay closing to find another source of cash, settle for a lower down payment with a higher mortgage rate, or not close at all.” The housing markets in San Jose, CA, San Diego, and Los Angeles top the list of areas that might be vulnerable to a stock market slump.These Pacific Coast metros—whose combined population tops 18 million—have a large portion of homes priced above $1 million.
“The extent to which we would expect prices to fall is going to depend on how eager sellers are and the overall balance of these responses,” McLaughlin notes. Durham, NC; Boise, ID; Austin, TX; Riverside, CA; and Las Vegas experienced a significant influx of buyers seeking more space and the flexibility of remote work, resulting in substantial price increases over a short period.