The Wealth Effect: Do you feel it?

Written by Posted On Tuesday, 28 January 2020 14:29

With the fresh stock and real estate market highs as well as consumer spending continuing to accelerate, we must ask, is there a “wealth effect” in play? The “wealth effect” refers to an increase in consumer spending that is relative to portfolio performance such as strong markets in real estate and stocks. Simply put, when a person’s investments go up they just feel “wealthier” and that leads to more consumption from consumers. When looking at its importance and far-reaching effects, it may surprise you!

The Wealth Effect’s Importance

Researchers determined that for every dollar of increase in stock market wealth, there is a 2.8 % rise in consumer spending per year. In addition to greater consumer spending, a rise in stock market wealth correlates with increases in local employment and payrolls. How significant is this? A recent study determined that GDP growth from 2008-2016 was close to 2.2% per year. The wealth effect was solely responsible for almost half a percent of that per year.

dow jones

Real Estate

recent study states that an increase in home value has generally had a larger effect on consumer spending then financial wealth. From 2016-2018 home prices increased by 12% which equates to an increase in housing wealth of $2.5 trillion. Certainly significant! The same study cited home improvement as one of the largest categories for increased spending. Similarly, while increased consumer spending is certainly a positive for the U.S. economy, we must remember that considerable decreases in real estate and stock market wealth can also lead to lower consumer spending and overwhelm the positive trends we currently see.

We expect that this could be a big year for the housing market because of the stock market gains. Why? Just as a prudent gambler who should cash out when having an incredible winning streak, people may indeed “cash out” some of their investments to purchase a home or want to upgrade and buy a new home.

However, as I am sure you know, economic headwinds are unpredictable. And while the United States’ subprime mortgage crisis was the first chapter of the 2008 financial crisis, it appears housing will instead be the final chapter in this economic expansion. Just like musical chairs when the music stops—and it eventually always does—this time it might be best that your money be in your chair/home rather than keeping it all in the market.

From the trenches,

Roy Oppenheim

Oppenheim Law 
2500 Weston Rd #404
Fort Lauderdale, FL 33331
Posted At: 

Rate this item
(1 Vote)
Roy Oppenheim

From Wall Street to Main Street, Roy Oppenheim is a successful serial entrepreneur and attorney focusing on Florida real estate, foreclosure defense, loss mitigation and Internet ventures.

He founded Oppenheim Law in 1989 with his wife Ellen Pilelsky and uniquely positioned the Firm as one of Florida’s leading boutique law firms in Weston, Florida.

Serving national, international, and local clients, Mr. Oppenheim has the highest rating (A-V) conferred by Martindale Hubbell Law Directory, the most respected directory of lawyers and law firms in the U.S.

In 1989, Mr. Oppenheim also co-founded and served as general counsel to ShopSmart Corp., the company that originated and owned the GNC Gold Card Program, a program that continues to this day and was one of the first cross-promotional programs of its kind.

In addition, in 1994, he co-founded Weston Title & Escrow, the oldest title company in Weston, Florida, and he currently serves as its Vice President. In 1999, Mr. Oppenheim served a one-year term on the board of directors for Catalina Lighting, a publicly traded company on the New York Stock Exchange.

Growing up in the Bronx, Mr. Oppenheim learned to be focused on success and driven to always persevere for opportunity.

In 2009, he started the South Florida Law Blog, which was voted the best business and technology blog by the South Florida Sun-Sentinel. He also serves as an expert witness on title industry practices.

Mr. Oppenheim has also co-authored two law review articles, Deconstructing The Black Magic of Securitized Trusts, published in the Stetson University Law Review’s Spring 2012 Edition, and The Emperor’s New Clothes, published in the William & Mary Business Law Review Volume 6.

Today, Mr. Oppenheim is a sought-after legal expert on issues relating to the real estate crisis and beyond. In addition to his own blog, he also has been a contributor to Yahoo! Homes, and featured on HuffPost Live, FOX News, and Lifetime TV. In addition he has been quoted in prominent national publications, including USA Today, The New York Times and Huffington Post, among others. Mr. Oppenheim also understands the power of social media, and can be found on a variety of social media platforms.

Mr. Oppenheim also speaks fluent German.


  • Florida Bar, 1987; Member of the Real Property Probate and Trust Law Section
  • New York Bar, 1987; United States District for the Southern and Eastern Districts of New York, 1987
  • U.S. District Court, Southern and Middle Districts of Florida, 1993


  • Princeton University, A.B., cum laude, 1982
  • Northwestern University School of Law, J.D., 1986
    • Member of the Northwestern University Law Review
    • Member of the National Moot Court Team

Original source:

Agent Resource

How to capture your next prospect - click here

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.