Dear Shareholders, we hope that you are all well and staying safe!
As depicted in the graph below, unlike the housing crash of 2007 to 2008, which was a direct
result of an economic slowdown primarily caused by a collapsing real estate market and a
meltdown in the mortgage industry, what is taking place today is nothing like what happened
then. This time, the stock market correction is being caused by an outside event – a
global health crisis called COVID-19 – with no connection to the housing industry. It seems
more reminiscent of the challenges we faced when the dot.com crash in early 2,000’s was
immediately followed by 9/11 and consumer discretionary services – airlines, leisure, hospitality,
restaurants and entertainment - were under severe pressure. Similarly, today people
are being asked to stay at home for extended periods of time, businesses are being forced
to close and unemployment has skyrocketed. Hence, the Federal Reserve lowered the federal
funds rate and an unprecedented government stimulus package was passed in order
to stabilize the economy. It is believed that once the general public is permitted to leave
their homes, return to work, businesses will open, employees will be re-hired and the economy
will start to flow as usual.
Exclusive On-Site Sales Agent Building 24 | Gr. Fl. Sales Office
718-747-0700 | www.sharesofny.com
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If the current situation is more like the markets in the early 2,000’s versus the markets during
the Great Recession, home values should be minimally affected, if at all.
Source: KCM, LIBOR/MLS
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