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Economy , Stocks

What’s Next for Real Estate? Watch This Indicator

Most real estate observers don’t even mention this housing market indicator

by Bob Stokes
Updated: December 21, 2022

It wasn't so long ago that home buyers were so eager to buy a house that they were foregoing home inspections and paying even more than what was already a lofty asking price.

Many of those home buyers who paid top dollar during the past couple of years are now having second thoughts. Here's a Dec. 8 headline from Fortune magazine:

Recent U.S. homebuyers are being hit with a massive wave of regret ran a similar story back on August 26:

Seven of 10 Recent U.S. Homebuyers Have Regrets...

The biggest reason for the remorse is that home buyers felt they spent too much money.

Unfortunately, it appears that this #1 regret will only become more pronounced -- if history is a guide.

What I'm talking about is this: Home prices tend to follow home sales and this headline tells you what's been going on with home sales (CNBC, Nov. 18):

Home sales fell for the ninth straight month in October...

Data has started to come in for some local real estate markets for November and it appears the downward trend is persisting. Here are just three examples:

  • Atlanta home prices, sales dip again in November (Dec. 9, Atlanta Journal-Constitution)
  • Long Island Home Sales Plummet... in November (Dec. 15, Newsday)
  • Home sales saw double-digit drop in Humboldt County [CA] in November (Dec. 16, Eureka Times-Standard

Homes sales is just one indicator of the likely future trend in home prices.

Another indicator is the stock market. In other words, home prices tend to trend with the stock market.

Indeed, Robert Prechter's book, Last Chance to Conquer the Crash, showed this chart and said:


Real estate prices have always fallen hard when stock prices have fallen hard. [The chart] displays this reliable relationship.

The overwhelming evidence currently in place for a major stock market decline is enough by itself to portend a tumble in real estate prices.

The stock market, as you know, has been in decline for over a year now. So, the question is, are stocks going to rebound from here and push real estate prices up, too -- or is there more evidence for a further stock market decline?

For well-researched answers, read our showcase investor service, The Financial Forecast Service.

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The Just-Published December Elliott Wave Theorist Says:

The world of finance is undergoing a historic shift, yet the import of what has happened this year has escaped most observers...

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A “Freight Train of Grains” Didn’t Cause Soybeans’ Recent Price Crash. So… What Did?

"Crash," "sink," "runaway freight train," and ever-lowering "limbo pole" are a few of the phrases used to describe the May selloff in grains, particularly soybeans. But before you blame the "bombshell" May 12 USDA supply/demand report for the slide, you'll want to read this first.

Commercial Real Estate: Prepare for a Potential Global Calamity

A lot of the commercial real estate market is faced with a decline in liquidity and falling values. The specter of defaults looms large. In at least one region of the world, there are reminders of the dark days of Q1 2009, as revealed by this chart.

'How people FEEL is how they ACT'

Like all ideas that make you want to slap yourself on the forehead and scream "How didn't I think of that!", the idea behind socionomics is simple: Social mood impels social action. When you know social mood's trend, you can forecast everything from the stock market to culture to politics and more. So, how then do you define the social mood trend? Watch our Head of Global Research touch on that in this video.