The Market Wont Save Us

I've received a lot of emails from optimistic people who think the strength of the US stock market will somehow save the drooping housing market. Unfortunately, I dont see that happening. Although a strong stock market would have overall positive effects on the greater economy, the fundamentals involved with the housing bust can't be overcome by new highs on the exchange floor.

Think back to when the tech bubble burst. Did a booming housing market save it? Nope. All the speculators just jumped from one bubble to another. That's the same thing that's going to happen again. When / If A new record is set on the DOW, a new round of speculators will ride whatever wave ensues. But the bagholders in the housing market will still be holding their bags.

Some of the cash might find its way back to the market, but not before a lot of people get wiped out financially. So, don't count on the stock market to save the day when it comes to housing. Housing has had its day, and that day is ending. Remember, it took six years for tech to bounce back, and housing couldn't save it. Expect similar time frames for housing, regardless of what the stock market does.