While most Americans have two parts to their investment portfolio — their homes and their stocks — they are knitted together in critical ways.

Which is why the current stock market plunge may already be hurting consumer confidence when it comes to the housing market, according to some experts.

The big sell-off in stocks that began last week has already sent mortgage rates plummeting, but so far that’s only translated into bigger demand for refinancings. The bigger questions for housing markets are whether stock market volatility will undermine homebuyer confidence, and whether declines in equity prices will mean buyers will have a harder time scraping together down payments.

“The biggest impact will be on consumer confidence,” said Pat Stone of Williston Financial. “The two most notable things missing from housing are the first-time buyer and the move-up buyer. Consumer confidence is critical to having the first-time buyer re-engage, and if the stock market decline turns into a bear market, consumer confidence will decline and the first-time buyer will continue to sit on the sidelines.”

Committing to a big mortgage payment is daunting when people feel their financial security is at stake. The financial collapse in 2008 spread like a virus bringing the housing market to its knees as people cut costs and held on during the great recession.

Global uncertainty — including Ebola, war in the Middle East and Europe’s faltering economy — has wreaked havoc in stock markets. The good news is that mortgage rates have plunged as investors seek a safer place to park their money — namely, bonds and mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

This morning, the yield on the 10-year bond fell 0.32 percentage points to under 2 percent. Bond yields and bond prices move in opposite directions, so investor demand pushes prices up and yields down.

But experts agree that having low mortgage rates does not necessarily overcome economic demoralization by the public.

Not everyone is worried.

“I doubt (the recent stock market volatility) will have much impact on housing unless the situation gets worse,” said Bill McBride, author of the well-regarded economics blog Calculated Risk.

Joseph Rand, a managing partner of Better Homes and Gardens Rand Realty, noted that the stock market crashed in 2000, “right at the beginning of one of the greatest real estate markets in history, without any real impact.”

The housing market, Rand said, “moves in seismic, long- term cycles, so short- term shifts in equities doesn’t concern me. The only place where stock market fluctuations directly impact real estate is in high priced markets in Manhattan and the high end suburbs, since those markets rely on Wall Streeters with healthy year end bonuses.”

Rand summed up his sentiments: “Bottom line: I’m not worried. Historically, the housing market is largely independent of the stock market.”

Century 21 Real Estate CEO Rick Davidson shares that sentiment — short-term fluctuations in stock markets don’t impact the long-term nature of the housing market, he said.

“We are in a long term housing recovery influenced by supply, demand, interest rates, consumer confidence, job growth and most importantly the American dream of homeownership,” Davidson said.

Ken Fears, NAR regional economics and housing finance director, said the impact of stock market declines should be more muted than is the norm, because trade-up homebuyers who rely on equity in their homes and cash buyers represent a higher than normal share of the market.

“Overall, employment has been strong over the last 8 months, so today’s retail sales weakness doesn’t impact much,” Fears said. “It’s too early to tell whether a stronger U.S. dollar and European recession could hurt employment growth down the line.”

Consultant and Inman News columnist Bernice Ross said that historically, stock market downturns “have created a flight to real estate. This normally creates increase demand and along with it, higher prices. The really big losers are first-time buyers, especially those who had their down payment money in the market. The first-time buyer market is already at the lowest point in years — this hit could decimate it completely.”

Sam Khater, deputy chief economist for data aggregator CoreLogic, said stock market declines are likely to have a direct impact on sales of high-end homes priced at $1 million and above.

But Khater expects only a small impact on consumer confidence, “especially since the fixed-income market has rallied and rates have fallen which is a net positive for residential real estate.”

30-year fixed-rate mortgage quotes on Zillow Mortgages

zillow_mortgage_oct_14_2014

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