1/22/2019 – A negative day with the Dow Jones 301 points (-1.22%) and the Nasdaq down 137 points (-1.91%)
As we have been saying, the stock market remains at an incredibly important juncture. Things are about to accelerate in an unexpected way. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here.
Since the stock market is doing exactly what it should be doing, at least according to our forecast, let’s for a day explore the real estate portion of the Everything Bubble. After all, it is finally getting ugly out there.
US Home Sales Get Uglier – But The Good Times Roll On
This housing downturn moved into the scene in 2018, a year when the economy was strong and created 2.6 million jobs. This downturn has been triggered by sky-high prices and rising mortgage rates, not by a recession or job losses. Those events – unavoidable as part of the business cycle are still waiting in the wings.
Real Estate inventory is piling up: Housing market unaffordable to most Californians so what happens next?
Price cuts. Cookies at open houses. Listings lasting longer than a few weeks on the MLS. The housing slow down is now officially here. Delusions usually end up on a direct path with reality. Housing is always a lagging indicator of underlying economic activity. People will fight to the bitter end to save their homes. Unlike the stock market, prices do not adjust overnight. However, in places like California the weak performance in the stock market last year is going to hit the bottom line for state tax revenues. It is also giving pause to VC money that was chasing absurd companies with nonsensical P/E ratios in search for the next billion-dollar unicorn. But little by little inventory is starting to pile up. People are opting to rent versus buy or in California, or as over 2 million adult “children” have opted to do, move in with their baby boomer parents. So what does the rise in inventory signal for 2019?
Existing Home Sales Plunge 6.4%, Down 10.3% Y-O-Y, Worst Reading in Over 3 Years
Sales by Region
- Existing-home sales In the Midwest fell 11.2 percent from last month to an annual rate of 1.19 million in December and down 10.5 percent from a year ago. The median price in the Midwest was $191,300, unchanged from last year.
- Existing-home sales in the South dropped 5.4 percent to 2.09 million. This is 8.7 percent lower on an annual basis. The median price increased 2.5 percent to $224,300.
- Existing-home sales in the West dipped 1.9 percent to an annual rate of 1.02 million in December and are now down 15 percent year-over-year. The median price rose 0.2 percent to $374,400.
Housing has peaked this Cycle
Housing and cars have both peaked this cycle. The slowdown will accelerate.
Those who could not afford a house in late 2018, still will not be able to afford one.
In other words, same as it ever was. Everyone should prepare for substantial declines in real estate prices across America. The only good news about any of this, if you can call it that, is the FED’s eventual drive to lower interest rates.
If you would like to find out what the stock market will do next, in both price and time, based on our mathematical and timing work, please Click Here
Please Note: Our latest call was a direct hit. While everyone was panicking our work projected an important bottom on December 27th (+/- 1 trading day) on the Dow at 21,725 (+/- 50 points). An actual bottom was put in place on December 26th at 21,713.
