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Here’s Evidence That “the Great Property Bust is Underway”

This anticipated real estate occurrence appears to be “right on schedule”

by Bob Stokes
Updated: September 22, 2020

It's always good to get ahead of a trend and not wait until it's obvious to everyone.

Consider the subprime mortgage crisis of more than a decade ago. As you'll probably recall, it took most investors by surprise, even seasoned financial and real estate professionals.

Indeed, long before the phrase "mortgage meltdown" was capturing the headlines during the 2007-2009 financial crisis, our Elliott Wave Financial Forecast warned subscribers about the real estate market. Here's a chart and commentary from the March 2005 issue:

DeflationaryRoleModel

Back in the 1990s, The Elliott Wave Theorist designated Japan's developing deflation as the best available model for the U.S. The figure shows the plunge in commercial, residential and industrial real estate prices since the Japanese stock market peaked in 1990.... The Japanese real estate experience will be replayed in the U.S.

Of course, we all know what happened regarding the real estate market collapse in the years immediately following that analysis.

Now, the Elliott Wave Financial Forecast is providing another warning. Here's a chart and commentary from the August 2020 issue:

GreatPropertyBust

As for the anticipated fall in property values, the Green Street Commercial Property Index shows that it is right on schedule. Home prices are still buoyant, but sales are down from the beginning of the year, and we continue to believe prices will follow.

So, it wasn't surprising to see this Sept. 18 Bloomberg news report headlined "A $700 Million Commercial Mortgage-Backed Securities Portfolio Is On the Brink of Collapse":

Bond investors who wagered on a group of malls... are starting to take losses.

The commercial-property bond, known as Starwood Retail Property Trust 2014-STAR, is backed by an almost $700 million defaulted loan.

Elliott Wave International's analysts expect that consumers of financial news will be seeing the word "default" a lot more.

Get more details by reading our flagship Financial Forecast Service.

Do You Know the "Key" to Market Behavior?

It's the Elliott Wave Principle.

Frost & Prechter wrote a book on the subject and it became a treasured Wall Street classic.

Here's an excerpt:

Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool: it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market's position within the behavioral continuum and therefore its probable ensuing path.

As our Elliott wave experts see it, the stock market now faces a critical juncture.

Tap into their latest insights now by reading our flagship investor package.

U.S. Stocks: Wave “Pattern Completed at 4 Degrees of Trend”

"Things will change over the course of the next few years," says our Financial Forecast co-editor Pete Kendall in this new interview. Hear it for yourself.

Microsoft (MSFT): Where Market "Fundamentals" Fail, Elliott Waves Prevail

September saw tech giant Microsoft Corp. in freefall, a rout ending September 30 at the stock's lowest level since March 2021. Oddly enough, the decline occurred amidst "fantastic" figures of growth and productivity. If you can answer the question, "Why did prices fall despite bullish 'fundamentals?'" you've got the job!

EXCLUSIVE

MSCI Taiwan, KOSPI: Looking at U.S. Dollar to Understand Stock Trends

The Asian-Pacific stock markets have been showing a clear correlation with the trend in the U.S. dollar. Watch our Asian-Pacific Short Term Update editor Chris Carolan explain why right now, it's a "very dangerous" moment for the regional stocks.