{"id":161018,"date":"2019-12-03T12:15:27","date_gmt":"2019-12-03T17:15:27","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=161018"},"modified":"2019-12-03T09:43:39","modified_gmt":"2019-12-03T14:43:39","slug":"about-to-relive-the-2007-real-estate-crash-again","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/12\/about-to-relive-the-2007-real-estate-crash-again\/","title":{"rendered":"About To Relive The 2007 Real Estate Crash Again?"},"content":{"rendered":"
December 3, 2019<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

Does history repeat itself?\u00a0 Are price patterns and chart patterns reliable enough to suggest that a global Real Estate market collapse may be set up?\u00a0 What would it take for another Real Estate collapse to take place in today\u2019s global market?<\/p>\n

First, let\u2019s start with this simple chart highlighting the \u201cBear Flag\u201d setup from 2007 and the current 2019 Bear Flag setup.\u00a0 This price pattern was enough of an early warning sign for our research team to run into our offices and tell us of the exciting pattern they just identified regarding Real Estate and what they thought could happen.\u00a0 We listened to them share their ideas and concepts of how we have 11 months to go before the 2020 US Presidential election takes place and how higher risk delinquencies and foreclosures are starting to spike.\u00a0 They suggested the political theater of the global markets and US election cycle will likely distract from the weakening economic cycle which could present enough \u201csmoke and mirrors\u201d to keep investors\u2019 attention away from this potential collapse in the housing market.<\/p>\n

Much like a magician attempts to distract you just long enough to pull of their new trick, could the political theater, global economic news cycles and the never-ending battle in Washington DC be just enough of a distraction that skilled traders miss this critical setup?\u00a0 We hope not.<\/p>\n

The peak that occurred in 2007 setup about 19 months before the 2008 Presidential election took place.\u00a0 The 2019 peak occurs about 13 months before the 2020 Presidential election.\u00a0 In both instances, a highly contentious political battle is taking place which may distract traders and investors from really paying attention to the underlying factors of the global markets.<\/p>\n

A real estate crash is no something to dismiss. For most of the people, their home is the nest egg, or their largest investment and watching this asset tumble in value 10, 20, 30% or more is serious. Before you continue, take a couple of seconds and join\u00a0our free trend signals email list<\/strong>.<\/strong><\/p>

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2007 vs 2019 Real Estate Market Topping Formations<\/h3>\n

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Recent economic data suggests that builders and permits experienced an increase over the past 60 days \u2013 which is vastly different than what happened in 2006-2007.\u00a0 By the time the Bear Flag had setup in IYR in 2007, new building permits had already started to fall dramatically \u2013 for at least 12+ months prior to March 2007.\u00a0 Currently, the number of building permits on record is sitting near 50% of the range established between 2000 and 2009.<\/p>\n

We authored a number of research articles this year that more clearly highlight our expectations:
\n\u2013 PART II \u2013 Is The Fed Too Late To Prevent A Housing Market Crash?<\/a>
\n\u2013 Are Real Estate ETFs the Next Big Trade?<\/a><\/p>\n

The recent increase in building permits could indicate a euphoric level of buying\/flipping by builders and speculators thinking \u201cits easy to make profits flipping these homes in this market\u201d.\u00a0 Much like the euphoric activity before the 2007 crash.<\/p>\n

The collapse that happened after the Bear Flag setup in IYR in 2007 resulted in a dramatic -73% decline in value over a very short 24 month period.\u00a0 Could something like this happen again in today\u2019s market?<\/p>\n

Our research team raised a couple of interesting points relating to the potential for a \u201crollover\u201d type of event taking place over the next 12+ months.<\/p>\n

First, the US Presidential election cycle could setup a very real fear that a new president could attempt to derail\/damage the marketplace with new policies, taxes and other unknowns.<\/p>\n

Second, the current Real Estate market has experienced real price growth for almost 10+ years since the 2009-2010 bottom and wage earners may already be priced out of certain markets \u2013 reducing overall demand at current price levels.<\/p>\n

Third, a lot of recent news has been published showing massive amounts of people moving away from larger cities\/states like New York, California, New Jersey, Chicago, and other locations.\u00a0 These people are moving away from higher taxes and housing costs and trying to move to areas that are cheaper and quieter.<\/p>\n

Forth, there are an estimated 40+ million \u201cbaby boomer\u201d homes that must be liquidated over the next 10+ years as these people\/families transition into elderly status.<\/p>\n

The reality is that unless price levels revert to levels that make housing more affordable or earnings levels dramatically increase over the next 3+ years, the price level for homes in the US and Canada is already historically high.<\/p>\n

2007 Real Estate Housing Selloff<\/h3>\n
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Real Estate Prices\/Valuation Testing 2007 Extreme Highs<\/h3>\n

How high?\u00a0 Take a look at this last chart of IYR and pay attention to the fact that current price levels are already at the historic high price levels from 2007.\u00a0 This should tell you almost all you need to know.<\/p>\n

Unless earning levels somehow rise dramatically over the next 24 to 36+ months, housing prices are already at or near peak levels for most consumers \u2013 even if the US Fed decreases interest rates another 25 to 50 bp.<\/p>\n

The other thing to consider is what type of new policies, taxes, costs would a new US president do to the housing market and global stock market?\u00a0 What would happen in Bernie Sanders or Elizabeth Warren were to suddenly take the lead in the polls wanting to raise taxes on everyone and install new trillion-dollar policies while attacking America\u2019s millionaires and billionaires?\u00a0 Think that may have some pull on the markets?<\/p>\n

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Our researchers believe we should cautiously watch IYR for further signs of weakness over the next few weeks and months.\u00a0 Yes, there is a very real potential that the US and global housing markets could collapse over the next few years \u2013 but right now we are looking at a Bear Flag pattern that may be an early warning sign of a potential price selloff.\u00a0 Nothing is confirmed yet but any week now could spark the start of something ugly for home prices.<\/p>\n

Yes, housing market economic data show some weakening while building permits and construction ramped up last month.\u00a0 Housing has certainly reached a mature economic state and we believe any collapse in the global stock market could send a wave of fear throughout the housing market as people attempt to get out before prices start to collapse. We\u2019ll keep you updated as we continue to watch the Real Estate market and our researchers pour over the data.<\/p>\n

As a technical analysis and trader since 1997, I have been through a few bull\/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive\/life-changing if handled properly.<\/p>\n

We\u2019ll keep you informed as this plays out with Wealth Building & Global Financial Reset Newsletter<\/strong><\/a> if you like what I offer, join me with the 1 or 2-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Round or Gold Bar Shipped To You!<\/p>\n

Chris Vermeulen
\nFounder of Technical Traders Ltd.<\/p>\n

TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com Does history repeat itself?\u00a0 Are price patterns and chart patterns reliable enough to suggest that a global Real Estate market collapse may be set up?\u00a0 What would it take for another Real Estate collapse to take place in today\u2019s global market? First, let\u2019s start with this simple chart highlighting the \u201cBear Flag\u201d setup […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-161018","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/161018","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=161018"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/161018\/revisions"}],"predecessor-version":[{"id":161022,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/161018\/revisions\/161022"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=161018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=161018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=161018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}