The question on the minds of many homeowners in Massachusetts is whether the current panic on Wall Street, which has seen major stock indices slide between 20 to 40 percent, will cause home prices to fall. Will the 2022 stock market crash derail what has been, up to now, 10+ years of rising real estate values in the Bay State?
The short answer is: home values are not necessarily going to fall! And that’s because, going back to the 1980s, stock market crashes alone actually have had little adverse impact on the Massachusetts housing market.
By looking back over the last 35 years at how Massachusetts real estate fared during the three most recent US stock market panics, it becomes clear that the health of the Massachusetts economy, not the direction of the stock market, has been the deciding factor in whether local real estate values went up or down.
The last three stock market crashes in the US have been in the Black Monday Crash of 1987, the Dot-Com Crash of 2000 – 2002 and the Global Financial Crisis of 2007 – 2009. The three charts below show how the Massachusetts real estate market performed during each of these stock panics. They compare the performance of the S&P 500 Index with the Case-Shiller Home Price Index for Greater Boston during each financial crisis. What you’ll see is that stock prices and real estate values do not dependably move in tandem.
As shown in the chart below, a 37% decline in the S&P Index in late 1987 had no negative effect on Greater Boston home prices. In fact, the Case-Shiller Greater Boston Index rose nearly 1% during the fall of 1987, and held steady during the following year, despite the dramatic stock market crash of 1987.
Looking in the chart at 1989 makes it very clear that there was a complete disconnect between stock values and Massachusetts home prices: as stock prices soared in 1989, the Case-Shiller Index began to sag. Massachusetts home values proceeded to fall sharply in the early 1990s as the Bay State’s mini-computer industry collapsed.
The Massachusetts real estate market experienced what became a near-depression in home values in the early 1990s, not because the stock market crashed in 1987, but because of a disastrous downturn in the regional economy.
The lack of any correlation between falling US stock prices and Massachusetts real estate is amply demonstrated in the next chart below. In the early 2000s, US stocks were hammered by the busting of the Dot-Com bubble. The S&P Index withered, yet the Case-Shiller Index for Greater Boston zoomed ever-higher.
Massachusetts real estate boomed in the early 2000s because the Massachusetts economy was vibrant and expanding. The strength of the Massachusetts economy trumped the weakness in US stocks. Anyone who sold real estate in the Bay State in 2001 because the stock market was falling missed out on a lot of appreciation!
The third chart below shows that if a stock panic’s wealth destruction is severe enough to trigger an economic recession that affects Massachusetts, then the Massachusetts housing market will be at risk.
We all remember the dire days of 2007 through 2009, when US financial markets seized-up, the banking system neared failure, and government bail-outs saved major US corporations and whole industries. The Massachusetts economy entered a deep recession and Massachusetts real estate took it on the chin: the Case-Shiller Index for Greater Boston fell 12% between January 2007 and January 2012.
Looking back at the last three major stock market panics in the US, the catch phrase from the 1992 Presidential campaign comes immediately to mind: “It’s the economy, stupid.” The Massachusetts real estate market will follow the Massachusetts economy, not gyrations in the stock market.
In 2022 and beyond, if the local economy remains strong, local real estate should do fine, despite the current stock market panic. If the Massachusetts economy enters a recession, Bay State real estate values will fall, no matter what the US stock market is doing.
So keep your eyes on the local economy. (We’ll discuss the economic outlook with inflation and rising interest rates in another post.) For now, just remember: the Massachusetts economy will dictate where Massachusetts home values head!
If you’re considering buying or selling a home in Massachusetts, we’re here to help! We can help you get the most out of your purchase or sale while we provide you with 5-star representation.
Start getting to know us by downloading our Client Welcome Kit. Then contact us to schedule a free consultation – we’d love to hear from you!
Copyright ©02038.com
S&P 500 historical data by Henry Han via Kaggle.com
Case-Shiller Greater Boston Index by S&P CoreLogic Case-Shiller Home Price Indices
You get more with Warren Reynolds than you do with other top real estate agents. You’ll find in Warren rare knowledge and experience dedicated to helping you achieve all the value that home brings. Warren has a law degree and 20+ years of home selling success in Massachusetts. — talk with Warren today! 508-561-6259
"We have now bought and sold five homes. By far, you have been the best realtor we have worked with. Your professionalism and knowledge are so valuable to your clients. You made this process so easy. "-CB
Make better decisions
and feel in control.
Did you know you can materially improve your home selling success by choosing your marketing agent and brokerage brand wisely? It’s true! A marketing agent with a sterling reputation, backed by a strong brokerage brand, will do wonders for the reception your home gets upon entry to market. Call Warren today! 508-561-6259
"As first time homebuyers we were fortunate to work with Warren. He was a great asset and sounding board. He always gave solid advice. Warren played a pivotal role in helping us negotiate with a difficult seller. We truly benefitted from having Warren in our corner and so will you." -JK
Maximize your home selling success.
Not only is Warren highly skilled and dedicated to protecting your best interests, he will be highly responsive to your needs! He CARES about his clients and is always, always there for them. Why not give it a try? Contact Warren now and see how well he takes care of you! – talk with Warren today! 508-561-6259
"I had many, many questions which Warren was always more than willing to answer with a never ending patience. Throughout the process Warren looked out for my best interest. I may have purchased a garden style condo but Warren treated me like I was purchasing a million dollar estate!" -MP
Get the attention you deserve.
Warren is a very creative real estate practitioner and he uses that creativity in ways that provide important advantages to clients. Creatively runs in Warren’s family! His uncle was Harnett T. Kane, an internationally-recognized investigative journalist and New York Times best-selling author of thirty books about the American South. Experience Warren’s refreshing difference today! 508-561-6259
"Your creative approach to all aspects of my move helped make the transition easy and pleasurable. You were recommended to me by a friend who appreciated your integrity, expertise, friendliness and conscientiousness - qualities that I have witnessed in abundance as we've worked together." -KB
Get creative with Warren.
Warren is a highly dedicated professional in all his real estate dealings. That means he will continue to serve you well, even when others would compromise on their commitments. Warren’s ultimate goals in business are better transactions and greater client satisfaction. Talk with Warren today! 508-561-6259
"As first time homebuyers we were fortunate to work with Warren. He was a great asset and sounding board. He always gave solid advice. Warren played a pivotal role in helping us negotiate with a difficult seller. We truly benefitted from having Warren in our corner and so will you." -JK
Maximize your home selling success.
All real estate agents are legally and ethically bound to be fiduciaries acting in their client’s best interests. His name stands for integrity and he takes his fiduciary duties to you very seriously. He’ll steadfastly put your interests first throughout your home purchase or sale – talk with Warren today! 508-561-6259
"Warren was always there for us. Throughout the process, Warren kept on top of all our concerns. Warren worked for us, and looked out for our best interest. He is a very professional and caring person." - BP
Feel safe and well taken care of.
Warren is a highly dedicated professional in all his real estate dealings. That means he will continue to serve you well, even when others would compromise on their commitments. Warren’s ultimate goals in business are better transactions and greater client satisfaction. His devotion to excellence can demonstrably improve your home buying and selling decision-making and, consequently, your experience of home ownership. Warren constantly stays current on the local housing inventory. And he is conversant with the broader market trends that affect home sales statewide link to Market Updates. Warren knows that the market knowledge he works so hard to maintain and his high standards of real estate practice help him achieve for you the lasting, true value of home ownership. Talk with Warren today! 508-561-6259
"Warren was the finest real estate agent we've ever worked with. This was evident to us in comparison to quite a few realtors we attempted to utilize, as they were not very helpful, understanding or willing to work with us based on our preferences." -SM
“If you think it’s expensive to hire a professional,
wait until you hire an amateur.” Red Adair
Did you know you can materially improve your home selling success by choosing your marketing agent and brokerage brand wisely? It’s true! A marketing agent with a sterling reputation, backed by a strong brokerage brand, will do wonders for the reception your home gets upon entry to market. Warren is known in the local brokerage community as a dependable, highly skilled professional who is a straight-shooter. Other agents like working with Warren because they know they can trust him to be a reliable partner in any transaction. And the Berkshire Hathaway HomeServices brand stands for sound decisions and extraordinary strength and stability. The “Forever Brand” brokerage created by Warren Buffet sets the standard for the real estate industry by focusing not on selling more homes, but rather on selling homes for more!Call Warren today! 508-561-6259
"As first time homebuyers we were fortunate to work with Warren. He was a great asset and sounding board. He always gave solid advice. Warren played a pivotal role in helping us negotiate with a difficult seller. We truly benefitted from having Warren in our corner and so will you." -JK
Maximize your home selling success.
Not only is Warren highly skilled and dedicated to protecting your best interests, he will be highly responsive to your needs! He CARES about his clients and is always, always there for them. In person, by phone, email or text, whenever you need him, you’ll get a prompt response from Warren! Warren’s clients rave about the high degree of consideration and attention they get from him. Why not give it a try? Contact Warren now and see how well he takes care of you! – talk with Warren today! 508-561-6259
"I had many, many questions which Warren was always more than willing to answer with a never ending patience. Throughout the process Warren looked out for my best interest. I may have purchased a garden style condo but Warren treated me like I was purchasing a million dollar estate!" -MP
Get the attention you deserve.
Warren is a very creative real estate practitioner and he uses that creativity in ways that provide important advantages to clients. Creatively runs in Warren’s family! His uncle was Harnett T. Kane, an internationally-recognized investigative journalist and New York Times best-selling author of thirty books about the American South. Warren employs his own creativity by producing compelling marketing, both in print and especially online! His www.02038.com, is a highly effective website promoting the wonderful lifestyle afforded by the Town of Franklin, MA. And his Market Updates content on Massachusetts real estate trends gives home buyers and sellers alike the context they need to make more informed decisions about their housing investments. Warren frequently uses his abilities to devise resourceful solutions to the diverse challenges that threaten to complicate most real estate transactions. Warren has made real estate his career and won many sales awards in his 20+ years in brokerage, including the highly prestigious Chairman’s Circle Gold Award and the elite Centurion Award. Experience Warren’s refreshing difference today! 508-561-6259
"Your creative approach to all aspects of my move helped make the transition easy and pleasurable. You were recommended to me by a friend who appreciated your integrity, expertise, friendliness and conscientiousness - qualities that I have witnessed in abundance as we've worked together." -KB
Get creative with Warren.
You get more with Warren Reynolds than you do with other top real estate agents. You’ll find in Warren rare knowledge and experience dedicated to helping you achieve all the value that home brings. Warren has a law degree and 20+ years of home selling success in Massachusetts. His legal knowledge and decades-long experience in putting — and keeping — real estate sales together give him a better handle on the legal, practical and emotional dynamics of the real estate transaction. Warren uses these skills to empower clients to achieve more! He often anticipates and resolves problems BEFORE they can become serious impediments. Enjoy the sense of trust, security and control that comes from having a highly skilled expert at your side — talk with Warren today! 508-561-6259
"We have now bought and sold five homes. By far, you have been the best realtor we have worked with. Your professionalism and knowledge are so valuable to your clients. You made this process so easy. "-CB
Make better decisions and feel in control.
All real estate agents are legally and ethically bound to be fiduciaries acting in their client’s best interests. But many agents give their fiduciary duties short shrift in their quest for the quickest and easiest path to a closing. Not Warren Reynolds! His name stands for integrity and he takes his fiduciary duties to you very seriously. He’ll steadfastly put your interests first throughout your home purchase or sale. This may make Warren work longer and harder for you than most other agents would. But ultimately, Warren’s diligence and attention to detail is his commitment to an experience that transcends the sale. He wants you to have the confidence and peace of mind that comes with having a true fiduciary protecting you. Discover the difference of working with an agent who does not view you as just another opportunity for a commission – talk with Warren today! 508-561-6259
"Warren was always there for us. Throughout the process, Warren kept on top of all our concerns. Warren worked for us, and looked out for our best interest. He is a very professional and caring person." - BP
Feel safe and well taken care of.