Captain_Walker

RED HOT! When is the housing market going to crash?

NASDAQ:HGX   PHLX Housing Sector Index
I didn't say that this post is 'red hot'. And I don't know if or when the housing market is going to crash. The captioned question in a popular search engine rose 2,450% in the past month! That must be super red hot! What's the RSI on that? ๐Ÿ˜„๐Ÿ˜‚ Expand the chart by pressing the + icon, for a clearer view.

There is extreme chatter in the blogosphere about housing bubbles and crashes. Some want to understand why all the interest in that. After all if something doesn't make sense what's the point of paying any further interest. Oh - except if it's US Equities and Bitcoin - right? I get it - some see sense in Bitcoin and Stock indices going north so they're ploughing their money into those two. The 'sense' is 'The FED has my back.. I'll hedge against a crashing US Dollar!'. That's all people know - I'm often told. Has the FED got your back on the price of your house? I don't think so. But I could be wrong. I'm actually wrong about 60% of the time. And nothing here is advice, anyway. So nothing I say seeks your belief.

Ahhh.. so what's that crazy spike in searches on the question? Could some be worried? Oh yes the 'some' are probably those who made a killing; now looking for signs of a true peak, to dump on those looking to buy into a superheated market. They're in the search engines checking out carefully for news and early signs of a reversal. Some are nervously watching for potential rises in interest rates and hyper-inflation. Those sort of folk probably know little about technical and fundamental analysis .

Is there a peak as yet in the housing market? Nobody can know because there is no dip and no double top at the leading edge, to define the peak (as yet). That means it can still go far more north - to dah Moon, for example. ๐Ÿ˜‰๐Ÿค

So for those who need to understand what's going on with house prices, I speculate the following:
1. The parabolic end of the curve up suggests to me this is a stampede of competitiveness among many who think that all bearish sentiment in the economy has been crushed. These are not the likely to be a large proportion of the people searching madly the captioned question.
2. People with cheap credit have jumped on a bandwagon, thinking perhaps "A new dawn is ahead..we've beaten the virus. We have vaccines. Time to git going! Things can only get better." You know the song?
3. Some believe that the rise in equities plus virtually unlimited monetary and fiscal stimulus means 'They've saved the economy.'
4. Housing property prices took a leap because there was more demand for homes in the pandemic period. But that's not the only reason. Anyway the initial pump got the bull market going. Then came the stampede with some false peaks as jitters set in for shorter periods. I'm not a housing sector analyst.

Now compare what happened in the CONSTRUCTION, PROPERTY & REAL ESTATE INDEX (chart below). Hmmm.. construction? Yeah.. that's nothing to do with housing - right? Think harder. Sound traders and investors know that the best moves they can make in any market involves 90% of their time spent thinking!

Is the housing market in the US a bubble? You and I won't know until after the sound of a POP!

If you have other ideas, do share. Let's get that discussion going.

Disclaimers: This is not advice or encouragement to trade securities or any asset class. This is not investment advice. Chart positions shown are not suggestions and not intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which has a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts or investing in any asset class. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
FED balance sheet 42% of GDP @ 2020-01-26. Does money have value anymore? [Different perspective on the virus https://youtu.be/NjTdvALChwk ]

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