Case says market instability sapping would be buyers, housing drags

Karl_Case_photo_credit_BloombergBloomberg reports that Sanjay Jain called his real estate broker four days ago to cancel a purchase on a three-bedroom home in Folsom, California, citing recent market volatility. “Seeing what’s happening on the stock market made me think that it’s not a good time to be buying a home,” Jain said. “I’m going to wait and see.” Wall Street instability is sapping the confidence of would-be property buyers, said Karl Case, co-founder of the S&P/Case-Shiller home- price index. That means housing, which aided every recovery except one before the most recent recession, may deepen its five-year drag on growth. “There’s a dramatic effect on an economy when a major sector is flat out,” said Case, professor emeritus of economics at Wellesly College MA. “If housing takes another leg down, it’s an accelerator. It’s going to make a recession happen faster and deeper.” Home sales fell in July, an applications for home purchases have dropped to a 13 month low on the week ending August 12, according to the National Association of Realtors. Other reports indicate that some housing markets have been brighter, including Miami FL and central TX.

(Karl Case photo credit: Bloomberg)

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