If you’ve been anywhere near the news, whether on television, online, or social media, you have likely noticed the precipitous fall of the stock market over the last few days. Coronavirus fears are taking hold in the minds of investors, who are running for shelter, or perhaps a face mask. I have seen my retirement savings take a bit of a hit over the last several days after a seemingly long run of positive growth.
In addition to the stock market slide this week, my house seems to have dropped about $20,000 in value since last summer, according to Zillow and Trulia. Their pricing conclusion seems to be well-founded, as people have been accepting lower prices over the winter months, while a mile away, homes continue to sell for higher prices. I’ll talk more on that later, but all-in-all, it’s a bit discouraging to see my net worth decline so much after working diligently to grow my wealth.
Over the last year, my mom and I have chatted quite a bit about what we thought the economy would do. This was mostly based on the talking heads on television, and we predicted 2020 would be the year things corrected. Albeit, we didn’t predict the coronavirus would be a root-cause. I do, however, think the selling is a bit irrational. While the Coronavirus is potentially a big threat on a global scale, it’s less likely that the disease will disrupt our economy to the point earnings will slide, people will start losing jobs, and the self-fulfilling prophecy of an economic decline will take place. Instead, I think this is a blip on the radar and unless some other negative economic news comes out, we will see this fade into history and stock prices will increase in the near term. In other words, if you’ve been waiting to get into the stock market, now is a good time to invest some cash and earn some returns over the next several months.
As mentioned earlier, I am seeing a 5% price decrease on my home. In my neighborhood, several pieces of land have started being developed into “multi-family” housing, or apartments. At first glance, this may seem to devalue properties, but in all actuality, the apartments being built are for people with higher incomes. Probably incomes similar to some of the homeowners in the area considering some bought at the low point from 2009-2011. These new apartments come with heft rents of $1,400 for a decent sized one-bedroom unit. I think that once built, people will again get used to a new apartment complex instead of a weedy cow field and prices will fall in line with those areas a mile away.
So, is it time to run for the exits and click the “sell” button? I really don’t think so, but I do not claim to have a crystal ball and see the future. What do you think? Leave your thoughts on whether 2020 will be a declining year for the stock markets, housing, the economy, or both.