What Will Happen to That $30 Trillion in U.S. Home Equity?

“It’s like someone turned off the faucet”

You probably remember the last big housing bust which began more than 15 years ago.

Elliott Wave International has observed that falling housing prices are generally preceded by a decline in home sales. The lag time may be some months, which was the case in the 2005-2006 timeframe.

Here’s what I mean: Our December 2005 Elliott Wave Financial Forecast noted:

In October, home sales fell a larger-than-expected 2.7%. “It’s like someone turned off the faucet,” said a real estate agent.

Our January 2006, Elliott Wave Financial Forecast provided an update:

Home sales are falling across the board now.

By mid-2006, U.S. home prices peaked, and a major housing bust followed.

Since the trough of that bust, U.S. home prices not only rebounded, but reached an all-time high in June 2022.

Yet, here in the late summer of 2023, homeowners may have a reason to worry. Here’s an Aug. 22 news item from bankrate.com:

Existing-home sales fall but prices still near record highs
Existing-home sales in July fell 2.2 percent, according to the National Association of Realtors. It’s a 16.6 percent decline from one year ago.

Given that prices are still near record highs, homeowners in the aggregate (at least for now) have a huge amount of equity.

As a Sept. 7 CNBC headline notes:

‘House-rich’ Americans are sitting on nearly $30 trillion in home equity…

But, as we learned from the prior housing bust, change can sometimes be dramatic.

As a reminder, here’s a June 2011 news item (Cleveland.com):

Americans’ equity in their homes near a record low
The average homeowner now has 38 percent equity, down from 61 percent a decade ago.

Is another major housing bust just ahead?

Well, as Elliott Wave International has noted, the stock market and the housing market tend to be correlated.

So, if you’re wondering what’s ahead for housing, keep an eye on the main stock indexes.

You can find our latest analysis by following the link below.

What Awaits the Informed Investor?

A Rare Financial Opportunity

If EWI’s analysis is correct, the stock market is set up to present the prepared investor with a once-in-a-lifetime financial opportunity.

That’s being conservative.

You can prepare as you follow our analysts’ commentary on the Dow Industrials’ unfolding Elliott wave price pattern.

You do not want to ignore the message of that Elliott wave analysis — especially at this juncture.

Follow the link below to learn more now.