Can the stock market continue to recover without home prices rallying?
On Tuesday, December 28th, the S&P/Case-Shiller index of property value was released showing that values of US homes fell by 0.8%. The decrease exceeded the 0.2% forecast and the decrease is the largest year-over-year decline since December 2009.
Can the stock market continue to recover without home prices rallying?
The concern is that if the housing market takes another 1 -4 years to recover, the American consumer might not feel confidant enough to keep spending and investors could lose faith the stock market. The Federal Reserve cited this week s Case/Shiller number as a reason why they continue to expand record monetary stimulus.
RealtyTrac, a company that publishes the largest database of foreclosure, auction and bank-owned homes in the US, forecasts that 2011 is expected to be a record year for foreclosures, which is a negative for housing prices. However, the stock market hasn t shown any signs of retreating and most financial analysts on Wall Street are predicting that the stock market will be up at least 10% next year.
What do you think? And how is the real estate market where you live? [=D]
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