Will the Falling Stock Market affect the Arizona Real Estate Market?

Does a bottoming out of stock prices have the same affect in the Arizona Real Estate market?
 
August 2015
 
The plummeting stock markets have stoked up a lot of fear and sucked all the oxygen out of the room when it comes to real estate and the Arizona real estate market. A falling stock market is certainly a bad omen for the high end of the luxury market, but the consequences of the current chaos may actually be positive for the rest of the housing market, especially in the Greater Phoenix area/Arizona real estate market, where population growth is positive.
 

Does this mean deflation is around the bend?

 
Rising interest rates are used to control inflation, but the really serious problem facing the world at the most is deflation. Governments are more likely to lower interest rates than raise them in this situation. This might stimulate more housing demand, although if a general air of fear starts to take hold, many people may put big decisions on hold for a while.
 falling stock market vs arizona real estate market
Much of the American population has been worrying about exactly the wrong thing for the past 6 years or so – runaway inflation, which is extremely unlikely to occur in the near or medium term. The real and present threat is deflation. Last February, twenty of the forty largest economies had already experienced negative CPI rates for 12 months, yet almost no one was mentioning it (and since its now August these CPI rates have been declining now for eighteen months).
 
Deflation and slow growth are affecting Europe more than us so the ECB are very concerned about this problem, causing them to recently introduce a Quantitative Easing program. If this broad deflationary trend continues for another six months, most of the world will have been deflating for two years. That is significant. Then the current economic problems in China and Europe, which are partial spillover effects of deflation, just might move the global economy into recession mode within a year. Since both central banks have stated they would aggressively fight a deflationary recession if it appeared, that would probably be the signal to act. Interest rates could possibly reach historic lows over the next 18 months.
 
Commodities and the Arizona Real Estate Market
 
For a wide range of commodities, we have weak worldwide consumption and a serious over-supply. This is getting very problematic when it comes to oil and gas, and is likely to get worse since Iran is poised to join the supply bandwagon. Several energy companies are probably going to be in trouble in the coming months and it is fortunate for Arizona that few jobs here depend on that industry.
 
Arizona Real Estate Market here & now
 
In Central Arizona we have a chronic under-supply problem with housing which is likely to cushion the real estate market from negative side-effects for quite some time. Even if fear causes demand to be subdued again like it was in 2014, it is not likely to drop low enough to create a lot of downward pricing pressure. If the prices of many other items start falling, housing and even the Arizona real estate market is likely to increasingly look like a sound place to park your money, at least for those who correctly analyze what is going on.
 
What do you think? The most interesting part of these articles is the conversations, so please leave your comments below!
 
Information provided by Cromford Report, copyright 2015
 
Tracy is a distressed property expert, Investor, Rehabber, and pre-foreclosure specialist.
 
She also is an avid blogger, vlogger, contributor to Real Estate Magazines, and hosts Real Estate Rescue, a show dedicated to the distressed property market.

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