Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

U.S. Housing Market San Francisco at Critical Mass

Housing-Market / US Housing Nov 05, 2014 - 05:13 PM GMT

By: Harry_Dent

Housing-Market

The website, zerohedge.com, recently reported on an interesting indicator that makes perfect sense, but it’s one that I hadn’t seen before.

They reported that the San Francisco Case-Shiller year-over-year home price index is the primary real estate market that foreshadows when the stock market or any other major bubble will crash. In other words, it’s the bubble that best forecasts other bubbles bursting.

The reason that San Francisco is unique is that it’s very bubbly from a very limited supply… it reflects both Silicon Valley and the tech bubble… and it also reflects the “mega” bubble that is China.


The Chinese dump a lot of money into the San Francisco area and when they stop it’s a sign that something is wrong…

Trouble on the Horizon

The earliest sign of trouble is when the year-over-year price increases initially rise above 20%. That can’t be sustained for long even in such a hot market.

Note how this index led the dot-com bubble crash and the tech wreck. It was down from early 2000 into mid- to late 2001. The Nasdaq crashed 79% from March 2000 to October 2002. This was the highest bubble in San Francisco reaching 31% before caving with the biggest stock bubble burst of our lifetime to follow.

After dropping to a low of -7%, the next rise took home prices there to a high of +24% in early 2005, just before the housing bubble peaked the following year. Since that was a real estate crash in essence, San Francisco saw one of the worst declines year-over-year, dropping a staggering -33% just from late 2007 to late 2008.

Overall real estate crashed 34% from top to bottom and that number is even greater than those from the Great Depression. Stocks crashed nearly 55% from late 2007 into early 2009.

The next round of rising home price gains in San Francisco were more limited as it was a short response to the first and most massive Fed stimulus (QE1). That advance peaked at +19% gains and was quickly countered by the sovereign debt crisis in Europe.

The index fell to -6% in late 2012 and stocks in the U.S. had their only major correction of the 2009 to 2014 bull market, down 20% into late 2011.

A Peak is Coming

This latest bubble in San Francisco has been one of the largest in the U.S. since 2012 and has taken annual gains that reached a high of +26% in early 2013. Since then the index has fallen to +9%… a dramatic swing of 17 percentage points.

That would strongly suggest that this index has already peaked indicating that the next crash in stocks and the economy and real estate is going to come sooner rather than later.

A further confirmation will come when this index becomes negative which seems likely to occur in the next one or two quarters. By then the stock bubble should already be bursting.

Since I expect both a real estate and a stock crash greater than the last financial crisis, I wouldn’t be surprised to see San Francisco hit the -40%+ range sometime in the next few years and stocks down 65% or more from the top.

The lower this index falls, the more worried we’ll become… and so should you.

We’ve been warning that Germany would disappoint in 2014 due to falling demographic trends there. And it keeps doing so. The China bubble keeps showing further signs of beginning to burst. And when it does… watch out.

I saw a recent new index that forecasts China’s growth rate will slow to 4% to 5% in the next year. Almost no one was expecting that!

We’re also warning that the still strong affluent sector will slow in spending beginning in 2015, as will auto sales that are the last major durable goods sector to peak late this year due to the spending peak at age 53 for the massive baby-boom generation.

And the Fed has finally tapered to zero just in time for worsening fundamental trends ahead.

The only question now would be… when will the deaf, dumb, blind and delusional stock markets figure this out?

You should be ahead of them and selling on any rallies or slight new highs.

I keep warning that it’s better to be safe than sorry as bubbles burst rapidly when they finally do.

Now you see it… now you don’t. It’ll likely be that quick.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2014 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules