Here's what EWI's Robert Prechter published in 2002:
"Credit expansion has supported real estate prices, but it is late in the game. The dramatic tumble in interest rates in 2001 has spurred a record number of home sales...People around the country are nearly unanimous in thinking that this is their last great opportunity to buy a house. Naturally, it is the opposite: It's your last chance to sell."
Conquer the Crash, 2nd edition, p. 155
It took a few more years for the residential real estate bubble to burst, yet Prechter's analysis proved predictive.
Fast forward some 9 years -- here's what he wrote in the latest Elliott Wave Theorist:
"Those who understood the deadly nature of the intense real-estate consensus of the 2000s are immensely relieved today. It's been great to receive messages from our subscribers who cashed out their property investments between 2002 and 2007."
Indeed, virtually every key measure of the national housing market is still trending lower.
The "hoped for" recovery is nowhere in sight. Reuters recently reported the data for February:
- Housing starts posted their biggest decline in 27 years
- Building permits dropped to their lowest level ever
- Groundbreaking on new construction dropped 22.5 percent
And Bloomberg reports in a March 21 article:
- Median purchase price declined to the lowest since April 2002
- [Home] purchases decreased 9.6 percent
- Median prices declined 5.2 percent from a year earlier
With home prices near their April 2009 lows, the so called "double dip" has arrived.
Does the latest housing data suggest a bottom now -- a time to go searching for your dream home?
After all, multi-year extremes in a given asset class often indicate that a turning point is near. But in the case of home prices, this premise must take the main trend of the economy (and other factors) into account.
And that's where in-depth analysis comes in.
The recently published April Elliott Wave Financial Forecast shows two unique charts about residential real estate, complete with commentary on what the latest housing figures reveal about the economy as a whole.