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History Shows a Correlation Between Real Estate and Stock Prices

U.S. housing prices: Keeping you ahead of the trend

by Bob Stokes
Updated: October 16, 2018

You've probably noticed the return of house-flipping television shows and infomercials in recent years.

Our December 2017 Elliott Wave Theorist made this comment:

A regular Friday supplement to the nation's financial newspaper is titled not "Homes" or "Houses" but "Mansions." As described by the publisher, this "luxury real estate section features estates, million dollar mansions, high end homes and premiere properties around the world." This is another sign of peak optimism in the real estate market. [emphasis added]

That issue of the Theorist called special attention to the home prices in San Francisco, which had reached a record high (chart below):

SFHome

Around the same time, home prices in other locales were also hitting record highs, including New York City.

So, Elliott Wave International analysts have not been surprised by two news items from CNBC. This first one is from Sept. 20:

Home sellers slash prices, especially in California

In the four weeks ended Sept. 16, more than one-quarter of the homes listed for sale had a price drop ...

This next one published Oct. 2:

The average price of a Manhattan apartment fell 4 percent during the quarter, to $1.93 million, while the median price fell 5 percent to $1.1 million.

Of course, price trends will vary from one U.S. real estate market to another. But what's going on in San Francisco and New York City is certainly not encouraging, no matter where a homeowner or prospective homeowner lives.

Many of these homeowners are also stock market investors.

If you're among them, consider this historical insight from the October Theorist:

Real estate tends to peak out before stocks. Property prices topped in 1926, and stocks topped three years later. Property prices topped in 2006, and stocks topped a year later.

Right now, EWI's analysts are providing subscribers with the all-important details real estate and stock market prices.


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