Philosophy of Finance: How does (national) financial health affect real estate?

[neo von retorch]

Posted previously specific to real estate forum, but longing for more philosophers to weigh in: http://forum.mrmoneymustache.com/real-estate-and-landlording/market-conditions-any-patterns-on-effects-on-real-estate-market/

In other words, we could be entering a market correction / bear market for the next few weeks/months/years. Let's say it's an official "recession." We know that this will almost certainly trigger the Federal Reserve to keep "the rate" at 0%, so mortgages will continue to be low interest. How else do buyers and sellers react to this kind of market? Do more people sell homes, maybe because their investments are hurting? Or the low rates continue to push buyers into the market pushing prices upward? Or you really need a crystal ball to have any clue what will happen next?

[Mr. Green]

Too many variables to say. In theory there could be a 20% market drop based on international concerns (like what is happening now) while jobs are still strong and wage growth trends up. If jobs are strong and wages are moving up, don't expect there to be any impact on housing at all because housing is driven be people's paychecks and how comfortable they feel spending money. For me, this falls into the category "waste of time to think about" because the number of variables and scenarios equal the number of starts in the sky. Unless you're Rain Main or something is just not possible to consider it all.

[neo von retorch]

Well, the question is not "what is going to happen in the future?" The question is, are there patterns or trends? While I label it as "philosophy", it certainly isn't going to help decision making to attempt to explore all theoretical scenarios! We agree on that point. Have there been observable trends in the past, though, with wage growth/stagnation, as well as GDP and market changes?