Appraiser John Philip Mason writes in:

I can’t help but wonder if the stock market will do better if the real estate market cools off.

It’s easy to understand why people are investing greater sums of money in a real estate market with double digit returns, while the DJIA and other indexes have been pretty flat for the past few years. Especially when you consider that most securities can only be purchased with up to a 50% margin (if at all), but some real estate deals are being financed at up to 100%.


2 Responses to “Wondering Aloud: Its All About Leverage”

  1. Dave Platter says:

    Interesting. But, if the real estate market cools off, do you think the subsequent loss in homeowner wealth and confidence could be enough to dampen the stock market, too?

  2. John Philip Mason says:

    Yes it could and only time will tell. But at the very least there will be those who need to invest money somewhere, be it annual contributions to retirement and college funds or excess income (yes some people do have that). Some of that money is now going into real estate, either directly or through real estate investment funds. It’s just interesting how everyone talked about “investments” five years ago and now they all talk “real estate”.