Do you own your home? Rent? Planning to buy? Planning to sell?
What about investment properties? How many do you own, if any? Are you investing simply in the home’s value, or is it a rental property that delivers steady income?
I could keep going. There’s so many questions to consider when it comes to real estate.
It’s especially startling given that stocks have pretty much moved flat this first half of 2015. Do they have further to climb? The general consensus at Dent Research is: “not much, if any.” We continue to predict a crash in stocks… and the market’s long-term breather has left us feeling very unsettled. (Harry discussed the implications of the market’s horizontal trajectory just yesterday.)
Considering that a crash in stocks is usually accompanied by a crash in real estate — as we saw in this century’s first two meltdowns — it’s time to take a careful look at our real estate holdings.
The situation in stocks isn’t the only cause for concern when it comes to real estate, however. There’s also the simple fact that the housing recovery… is completely bogus!
Harry’s been looking into this and wrote his thoughts to you on Monday. To connect his view to what others are saying, he referred to a piece written by Keith Jurow, who’s been warning about a greater housing crash for years.
It turns out that many of the positive figures are quite misleading. One figure shows a mortgage delinquency rate of 3.9%. Some of the major banks report figures close to 14%! And the numbers coming out of the most bubbly markets — take the NYC metro area — are upwards of around 40%!
Where the hell is the truth!?
The 3.9% figure is based on the total numbers of delinquencies… the larger figures take into consideration the actual outstanding balance. You might have a delinquent homeowner with a $1 million home. On paper, one delinquent homeowner sounds a hell of a lot better than $1 million outstanding.
That’s a time bomb waiting to go off.
The same day Charles gave you an update on an indicator that continues to show the stock market is priced to deliver a negative 0.3% return over the next eight years. We have a stock market that has seen mostly flat earnings growths for six months as it’s traded in a narrow range. As this indicator shows we’re pushing into bubble territory — from which the chart shows have been followed by massive falls — it’s becoming very clear we’re in store for a correction.
Adam is also proceeding cautiously and has added some “correction protection” for his Cycle 9 Alert subscribers. As he told readers on Tuesday, the bulls are getting out of shape! The market’s been in a rest period for about six months, and he ran some calculations that show returns tend to be worse than following shorter rest periods of two or three months.
However, this does not mean we’re destined to suffer negative returns the rest of the summer, as Adam explained. He currently has two open positions up around 50% even as the bears are flashing their fangs.
Stay tuned for next week’s updates.