Watson International

An Overview of the 2017 Market

It is no secret that after the election of our President of the United States Donald Trump, there have been many changes and positive impacts in the nation’s economy, including the stock market. Since his oath into office in January 2017, many of the baseline stocks have been hitting record highs all years. If this pattern keeps up, we may continue to see the stocks rise throughout the 4 years of the President’s term.

CNN reports that stocks this year, specifically the DOW has hit many milestones, the latest being 24,000 points. Matt Egan reports that “The boom in the stock market is a clear reflection of improvements in the U.S. economy. New numbers published on Wednesday show the U.S. grew at a brisk 3.3% pace between July and September, the best growth since 2014 and the second-straight quarter of 3% growth” (6). For multiple quarters, it is evident of the progressive improvement of the stock market and growth in the US economy.

Both primary and secondary markets are thriving in the US economy. This also goes hand in hand with real estate property investment and alternative investments in the secondary market. Much of how the stock market behaves is due to market speculation and press. The economy is currently boosted because of a diverse economy that puts faith in investments and in the American markets. Stephan Rabimov from The Observer writes that “The American market is one of the most resilient due to being supported by perhaps the most diverse economy in the world. People are still looking to live the American dream!” (5). The Street also reports home demand and sales being the highest in the United States in over a decade. Reporter Brian O’Connell writes “According to the U.S. Commerce Department, sales of new U.S. single-family homes rose by 6.2% in October, to 685,000 units. That’s the highest home sales level in a decade, with new home purchases in the U.S. Northeast leading the charge with a 30% hike in October” (7).

To follow up, John Engle of Seeking Alpha writes that “secondary markets are once again heating up” (1). Since the stock market has seen a positive trajectory since the election of President Trump, real estate market has reflected the same. In the United States and specifically New York City, the value of property has significantly increased because of the positive outlook in the stock market. Investment property as well as residential property is starting to reach an all time high.

Prior to the election of President Trump, real estate was not as popular as an alternative investment. However, a recent study by the Boston Consulting Group found that, at the end of 2016, alternative investments made up about 15 percent of global assets under management (4). This solidifies the fact that although real estate is less liquid than many other investments, those looking to add to their portfolio have turned to real estate as an investment choice because of its consistency and growth in the current market. Engle of Seeking Alpha also writes “In fact, according to PwC’s latest survey of industry opinion, secondary market investment interest is up 12% from where it was in 2013″ (1). The Real Estate industry has always been a healthy and wise investment, and now that stock prices have increased, it is an even better time to invest.

Since the stock market and the real estate are linked, the stocks from companies based out of the real estate industry are really soaring. Brian O’Connell from The Street writes ” Which homebuilding stocks to consider? Most, if not all, of the major builders should benefit from industry growth.Toll Brother (TOL), for example, rose from $47 per share to $48.50 immediately after the Commerce Department release….[and] Lennar Corp. (LEN), another major homebuilding company, also saw its stock price rise with the October home sales news….Over the longer term, housing market investors could move on stocks that have indirect links to the real estate sector” (7).

Real estate, like all investments, requires careful planning and integration into a current investment portfolio. Business Insider writes that “every individual should be investing according to the asset allocation that is right for them based on their goals, risk tolerance, and time horizon” (3). While there are many different options to invest, the economy thrives more when people invest wisely.

The best way to know is to determine your needs for long and short term investments. As the stock market continues to increase and improve the economy, it will be interesting to see the increase in demand for real estate as an investment as well.

(1) https://seekingalpha.com/article/4129319-growing-interest-secondary-markets-warning-sign-real-estate

(2) https://www.builtinchicago.org/2017/12/05/blockchain-cfx-markets-makes-real-estate-investments-more-buying-stock

(3) http://www.businessinsider.com/financial-planner-what-to-know-before-investing-in-real-estate-2017-11

(4) https://www.cnbc.com/2017/12/04/deciding-if-alternative-investing-makes-sense-for-you.html

(5) http://observer.com/2017/12/justin-fichelson-on-the-us-real-estate-investment-trends-for-2018/

(6) http://money.cnn.com/2017/11/30/investing/dow-24000-stocks-wall-street-trump/index.html

(7) https://www.thestreet.com/story/14403381/1/with-real-sector-booming-what-housing-sector-stocks-will-pop-.html

Written by Kylie Keller