[quote=deadzone]FLU, I don’t disagree that such houselholds exist that you describe. But I disagree that it is a major factor. Furthermore, you are talking about discretionary income. Purchasing a house is not a discretionary purchase. A downpayment is necessary as well as the ability to pay a substantial montly mortage payment. These require two things: 1. cash in hand 2. good salary. Rising stock market isn’t going to help most people with these two things.
Your theory appears to be that if the stock market doesn’t crash the housing market will hold up. I think that is absolutely ridiculous because there simply isn’t very much correlation. Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?[/quote]
I don’t think I’m saying if the stock markets hold up that the housing market isn’t going to come down. But in certain submarkets (the ones that said households are actively looking), I don’t see a swift crash coming in the absence if a roaring equity market continue.
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Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?
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Yes I know several people who put 30-40% down on a primary home from their stock option/RSU sales. Some use it toward buying property outright.
Just recently, several of my former colleagues (on the order of 15+) who had a boatload of then worthless Intuit stock options have sold this year and capitalized on 100% appreciation…What did these folks do with the money? They bought a bunch of break even or slightly+ cash flow positive condos and homes in Escondido, sdsu area,etc. One lady bought 6 condos this year along…Fully paid off. I asked her if she was crazy. Her response? “At least these homes are tangible assets with utility… What’s to say my options don’t become $0 next year?” Again, most of these people I know aren’t C-level execs.. Just normal enginerd workerbees that’s been doing the same thing over quite some time at the same company.
