What Does A Stock Market Crash Mean For The Minneapolis Duplex Market?

Recent stock market volatility may have many Minneapolis and St Paul duplex owners wondering what if any, impact may have on real estate and multifamily housing.

Unfortunately, there isn’t a definitive answer.

Luxury properties and their owners are, ironically, most impacted by stock market fluctuations. Put plainly, this is because these are the people who own stocks. If their stock portfolios are up in value, they tend to feel better off financially. When the market plunges, they become less financially confident and, as a result, less inclined to make substantial financial moves.

Lower-end properties and consumers, on the other hand, don’t own stocks. Therefore, more affordable duplexes and homes are less impacted than properties in more affluent neighborhoods.

During market volatility, many stock market investors move their money into bonds, which have a guaranteed rate of return. Falling interest rates are usually a sign of a weakening economy. Falling interest rates effectively reduce the yields on mortgages.

Falling interest rates typically inspire a wave of refinancing by those who already own property, but with mortgages at higher rates.

However, falling rates don’t necessarily result in a wave of duplex buyers.

A slowing economy often results in people losing their jobs. This causes people to become more cautious; to wait and see how things shake out before moving forward.

In other words, the real estate market stagnates until buyers regain some confidence. Factors like a leveling out of the stock market, a minor amount of job losses, and the stock market leveling out can help reassure buyers enough to become willing to take advantage of lower interest rates.

While the stock market seems to have rallied after a tumultuous few days, it bears continued attention. Any sustained changes, whether up or down, can play a large part in determining the real estate market in the weeks and months to come.