How Macro Factors Affect the Housing Market

IRVINE, CA—There is a connection between the stock market, falling oil prices and the housing recovery. After RealtyTrac released its July 2015 US Home Sales Report, which showed that sales of properties in-foreclosure and cash sales were down from a year ago to multi-year lows, GlobeSt.com spoke exclusively with the firm's VP Daren Blomquist about macro factors and how they impact the housing market.

GlobeSt.com: Is there any correlation between what happens in the stock market and what happens in the housing market?

Blomquist: Yes, there is. The stock market is more fickle and more prone to volatility, so it would take a longer-term slide there to start rippling out to the housing market. But if we do see a longer-term slide in the housing market, it certainly could ripple out and have a negative effect on potential homebuyers both psychologically and in their pocketbooks.

GlobeSt.com: Do the “cracks in the foundation” of the housing market, as stated in your report, present any real threat to its recovery?

Blomquist: The cracks in the foundation of the housing recovery are not enough to collapse the recovery at this point. But more shockwaves in the economy could certainly widen those cracks into wider fissures that could threaten the housing recovery we've been seeing over the past three years.

GlobeSt.com: Is there any impact on the housing market from falling oil prices?

Blomquist: Similar to the stock market, this tends to be more volatile, but a longer-term trend certainly can impact homebuyers both psychologically and in their pocketbooks, causing them either to feel confident and have a little more disposable income—and be willing to drive farther to buy—if oil prices continue at their low level, or causing them to feel fearful and have less disposable income if oil prices experience a sustained increase.

GlobeSt.com: What else should our readers know about macroeconomic factors and the housing market?

Blomquist: Investors—both foreign and domestic—buying with cash have been a big part of the housing recovery over the past three years, and they continue to be a major influence in some markets, arguably overinflating home prices in some of those markets. Those investors are more likely to respond to global and domestic economic problems by curtailing their purchases, which could quickly turn the momentum in markets more heavily dependent on that cash, investor buyer.