Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

U.S. Housing Market, Worst Behind Us Or Another Downleg?

Housing-Market / US Housing Dec 05, 2009 - 12:48 PM GMT

By: Tim_Wood

Housing-Market

Best Financial Markets Analysis ArticleThis past spring and summer there was a surge in real estate activities.  The consensus amongst the realtors and builders that I talk to are of the opinion that the worst is behind us.  However, the charts say we are now seeing another housing slow down.


I was able to successfully call the housing top using my methods of cyclical analysis.   The first of a series of articles on this topic was published here in the October 28th 2005 Wrap Up, in which I gave the parameters that would confirm a major top had occurred.  I also did follow up articles in early 2006 as the topping process unfolded.   The week of May 26th 2006 we saw cyclical confirmation that a major top had occurred and by July 2006 the pain was beginning to be felt.  

I specifically remember talking to builders and developers in early 2007 and they were confident that the weakness into 2006 was just a temporary phenomenon.   But, the cycles held true and it proved to be that this was a major top and not just a temporary slowdown.  

By mid 2007 the reality of the situation began to set in and by early 2009 the wrath of the real estate bubble was widespread.  I know of houses that sold earlier this year for 60 cents on the dollar from what they had previously sold for just a few years earlier.  Many builders in my area have been forced out of business.  There are still abandoned developments and the foreclosures continue.  I know first hand of cases in which people have walked away from their homes because they owed more on the property than it was worth.   In a recent conversation with a realtor that works foreclosures he explained that in January he was seeing foreclosures selling below asking price.  Now, he is seeing foreclosures selling above asking price.  

What has happened is that prices have reached enough of a low to spark speculative buying.   Because of the deep discounted price compared to just a couple of years ago, people are coming in and picking up what is now perceived as deals.  As a result, we saw a pick up in real estate this past spring and summer.  In my area we have even begun to see some new building.  But, I believe that pick up was likely a bear market rally if you will.  I still know of cases in which people are walking away from their homes.   Just as the charts and cycles were used to identify the top, I can now use the charts to help monitor the current developments and assess the health and vitality of the pick up seen earlier this year.

In the first chart below is the Philadelphia Housing Index.   It is the ebb and flow of the intermediate-term cycle, which I have noted with an “I”, that is important.  Note that as the housing boom unfolded, this cycle progressively made higher highs and higher lows.   It was then in early 2006 when price broke below the 2005 intermediate-term cycle low that served as a warning that longer-term cycles had peaked and that THE top had been seen.   As you can see in the chart below, price advanced this past spring and summer out of the most recent intermediate-term cycle low.  

However, my indicators now tell me that this cycle has likely topped.   The key will be how the decline into the next intermediate-term cycle low unfolds.  My suspicion is that we will see the intermediate-term cycle depress prices into early 2010, but that price will hold above the previous intermediate-term cycle low.  Then, once the next cycle begins to advance, optimism will again return the real estate market. 

We will see another spurt in sales and building as price moves up out of the intermediate-term cycle low in early 2010.  It will then be that next intermediate-term cyclical advance that will be of key importance and that will put the Housing Index, and consequently the housing market, at risk of a setup for another leg down to begin.  We will have more data to assess this situation with once the intermediate-term cycle low in early 2010 is made. 
 

Next I have included a chart of the Dow Jones Home Construction Index.   Here too, I have marked the intermediate-term cycle lows with an “I”.  Here too, we have seen a bounce out of the low that was made earlier this year.   Based on my Cycle Turn Indicator, which is not pictured here, the intermediate-term advance has most likely run its course and the technical outlook here is pretty much the same as with the Housing Index.

The bottom line is that we should expect further weakness in this sector into early 2010.  It will be the developments that follow in the wake of this weakness that will be key in determining whether or not housing has made a longer-term lasting low, or if this was all just a flash in the pan.   Given the still fragile state of the economy, the ongoing credit crisis, continued stream of foreclosures, business failures, bankruptcies, etc, it is far too early to say that the real estate market has made a lasting low.   Just as the charts were used to identify the top, they can be used to identify the bottom and at this time we do not, in my opinion, have sufficient data to say that housing has bottomed and with the fundamentals as bleak as they are I would argue that the data there is pretty much the same. 


I have begun doing free Friday market commentary that is available at www.cyclesman.info/Articles.htm so please begin joining me there.  The specifics on Dow theory, my statistics, model expectations, and timing are available through a subscription to Cycles News & Views and the short-term updates.  I have gone back to the inception of the Dow Jones Industrial Average in 1896 and identified the common traits associated with all major market tops.  Thus, I know with a high degree of probability what this bear market rally top will look like and how to identify it.  These details are covered in the monthly research letters as it unfolds.   I also provide important turn point analysis using the unique Cycle Turn Indicator on the stock market, the dollar, bonds, gold, silver, oil, gasoline, the XAU and more.   A subscription includes access to the monthly issues of Cycles News & Views covering the Dow theory, and very detailed statistical based analysis plus updates 3 times a week.

By Tim Wood
Cyclesman.com

© 2009 Cycles News & Views; All Rights Reserved
Tim Wood specialises in Dow Theory and Cycles Analysis - Should you be interested in analysis that provides intermediate-term turn points utilizing the Cycle Turn Indicator as well as coverage on the Dow theory, other price quantification methods and all the statistical data surrounding the 4-year cycle, then please visit www.cyclesman.com for more details. A subscription includes access to the monthly issues of Cycles News & Views covering the stock market, the dollar, bonds and gold. I also cover other areas of interest at important turn points such as gasoline, oil, silver, the XAU and recently I have even covered corn. I also provide updates 3 times a week plus additional weekend updates on the Cycle Turn Indicator on most all areas of concern. I also give specific expectations for turn points of the short, intermediate and longer-term cycles based on historical quantification.

Tim Wood Archive

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


Comments

K.V.Varghese
08 Dec 09, 12:37
US Housing Scam

Since the great depression of 1927 the US government has intervened to provide an umbrella to make the American Dream for housing a stick against all principles of economics. The truth is that the average US citizen out there can never afford or eligible to live in those American Dream houses. He is incapable of earning himself for paying it.It is the same Utopian ideas of erst where Soviet Union to give its citizen cradle to grave State Paradise. The mighty giant that challenged post war world is now history. The demise of the dollar and decline of the US are written on the walls for the same reasons.


Post Comment

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

6 Critical Money Making Rules