Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Housing Market Warning - Don’t Sit On Your Real Estate!

Housing-Market / US Housing Dec 22, 2015 - 06:11 PM GMT

By: Harry_Dent

Housing-Market I suppose you could say we have World War II to thank.

Upon returning from the war, soldiers had their GI benefits to enjoy and a deep-seated desire to start a family. And so was born (quite literally) the baby boom, and an accompanying surge in home buying.

Out of the ashes of destruction arose an American middle class and the first generation able to more broadly buy homes with long-term mortgages.


Their kids, the now infamous baby boomers, decided this home-owning thing was a good idea. When their turn came in the 1970s, they surged into the real estate sector like a pig moving through the python!

By early 2006, they had convinced themselves and everyone else that real estate only goes up…

What a painful, rude awaking the 2006 to 2012 housing collapse was! I strongly warned of this in late 2005 in my newsletter. With 2008 the hardest time during that six-year period, and the subprime crisis of monumental proportions, it blew hardworking Americans out of the water and then drowned them in underwater mortgages, debt defaults and disgrace.

Thanks to my demographic and cycle research, this event was no surprise to us…

Personally, I was out of real estate early enough for the downfall between 2006 and 2012 to not impact my wealth in any way. And I’d warned my subscribers many times about the looming crisis, so many of them were also safely out of the sector when the sword fell as well.

I’ve actually received many notes from readers over the years telling me how my warnings saved them a fortune when the real estate bubble burst. One business person in our Network told me that he was spared millions by getting out of his real estate just before the crash. He was in the process of buying a building in South Florida in 2006 that was going to cost him somewhere between $10 million and $15 million. After attending one of our Demographics Schools (pre Irrational Economic Summit days) in Minneapolis, St. Paul, he hauled his board of directors out to a meeting with Rodney and me, and based on our research, cancelled that purchase. He’s grateful he did!

As it turned out, that real estate crash was worse than the one the Henry Ford generation endured in the early 1930s. The last crash saw real estate down 34% (compared to only 26% lost during the Great Depression years), with markets like Las Vegas, Phoenix and Miami losing as much as 50% or more!

I wish I could say that was it. I wish I could say that all the reports you’ve seen lately are proof that the real estate market has turned around again and home prices are set to rise for the next 18 years.

Unfortunately, I can’t, which is why I remain out of the real estate market.

You see, bubbles always go back down to where they started – and often a bit lower. I have chart after chart (after chart) that shows this happening time and again throughout history. It’s so reliable you could bet on it and win.

And right now, real estate would have to go down a total of 55%-plus to erase the bubble gains from just early 2000 – 40% or more from here after the bounce. That means, despite the “positive” reports, we haven’t seen the worst of the real estate meltdown yet!

Let me show you…

Look at how much new home sales fell from July 2005. The chart below adjusts for rising population – showing the ratio of new homes to the U.S. population – which makes that collapse even more dramatic.

The drop was 82% (adjusted for new homes per person)! This hasn’t happened since the 1970s and was much worse than even in the Great Depression.

What’s going on here?

Well, real estate is the only durable thing we buy that lasts nearly forever. We build a home and multiple generations live in it. When the baby boomers moved through the real estate market, they built more homes to accommodate their bigger numbers. But the millennial generation now following, even when adjusted for immigrants, doesn’t quite reach that same peak set by their predecessors.

In short, we won’t need more real estate for decades to come… especially as the baby boomers downsize and die, leaving more homes vacant. When I adjust real estate buying trends for peak buyers at age 41 minus dyers at age 79 in the U.S. (who are sellers, of course), the net demand for new homes actually declines into 2039 – that’s 24 years from now!

This will mark the greatest shift in real estate in history.

The greatest long-term bust into 2020-plus will follow the greatest long-term boom from 1933 to 2006.

That should not be a surprise as real estate in Japan has declined 60% (80% commercial) and never bounced significantly for 24 years!

You better really love your real estate, for business or personal reasons, to own it for decades. If you don’t, sell it. As I say in Chapter 3 of The Demographic Cliff: “Real estate will never be the same!”

And don’t expect to get rich by simply sitting on real estate anymore. You won’t enjoy the appreciation your parents, grandparents and great grandparents once did. All you can hope for is positive cash flow if that is feasible even in a downturn ahead – or if you can own cheaper than you can rent.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2015 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in