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The Effect of Stock Market Volatility on Real Estate

NEW YORK CITY—With the market proving itself especially volatile, what does that mean to the real estate market? James Nelson looks at the numbers.

By James Nelson | Updated on November 05, 2014

NEW YORK CITY—This past month has been a wild ride for the stock market. On October 15th, the Dow dropped 450 points, which was the largest drop in three years. It then bounced back 263 points on October 17th for this year’s second highest gain. Fear of global economic instability and even Ebola were initially to blame, but then strong corporate earnings offset some of these losses later. Clearly, this volatility has been concerning to investors across the globe, but how does this instability affect real estate values?

What first comes to mind is that these recent events are a positive for real estate values. During uncertain times, investors will often retreat from the public markets and search out safe havens such as treasuries and hard assets. Real estate, unlike gold and other commodities, has the unique distinction of having cash flow, in addition to the potential for appreciation.

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