Three More Ominous Housing Signs

You're receiving this email as part of your subscription to Lou Basenese’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] Three More Ominous Housing Signs Thursday, July 7, 2022 About a month ago, I put you on [high alert]( that the runaway residential real estate market could come to a screeching halt. Why? In short, we can thank interest rates nearly doubling in a span of six months, median home prices hitting new highs month after month, wage increases waning, recession risks mounting, and stock prices collapsing, all of which make a new “home sweet home” all the more unaffordable and unattainable. Yeah, I know. We all hate to hear it, but asset prices don’t go straight up forever. Mark my words: real estate will be the next reminder of this market reality. The good news? We can profit from downward price movements, too. And based on the latest real estate data points, there’s still plenty more ahead. Here’s how to trade it… > ADVERTISEMENT < US Dollar Replaced By "Biden Bucks"? A former advisor to the CIA and Pentagon now believes President Biden plans to retire the US dollar we know. And replace it with what he calls "Biden Bucks." It is underway. On March 9, Biden signed Executive Order 14067, which could pave the way for Biden Bucks. [Click to see how to save your investment and retirement accounts.]( Sudden Reversals Happen First things first, I want to provide important data perspectives to make sure you’re aware how far and how fast home prices have risen. We just witnessed the 39th consecutive month of record high prices for homes in the U.S. Even the village idiot knows that’s not sustainable. What’s more, if we zoom out a little and look at longer-term home price increases, they’ve soared 20% over the last year and 38% over the last two years. Again, not sustainable. So what happens when real estate prices start correcting? In short, they shift into reverse in a hurry, which makes perfect sense since there’s no real-time ability to liquidate. Instead, it’s a negative feedback loop, whereby lower selling prices lead to lower bids and lower selling prices and lower bids. If you don’t believe me, look at history. click image to enlarge) After the last housing crisis, prices reversed almost as fast and far as they advanced. You’ll also see that the current housing price boom exceeded the last one. So it stands to reason the coming bust will be at least as severe, if not more. Especially when we consider the next data point… From Flipping to Flopping During the first quarter, roughly one out of every 10 homes in the U.S. (or 9.6%) was a “flip” — bought and sold within a year. That’s the highest level since 2000. Again, not sustainable. To put those numbers in perspective, the percentage of flippers checked-in at about half that level at the beginning of last year. With profit margins on the decline, thanks to soaring interest rates and inflation (i.e — labor and material costs), all that flipping is going to come to a quick stop. click image to enlarge) You remove 5% to 10% total demand from the system and price declines aren’t likely, they’re guaranteed. If you’re still reluctant to believe me, consider this third and final market dynamic… Big Apple, Big Implications As I’ve shared with you in relation to countless other assets and market segments, leading indicators matter. When it comes to real estate, prices and conditions in the priciest markets (think New York City) often serve as the proverbial canary in the coal mine. And guess what? The outlook is rapidly changing. As Frederick Warburg Peters, the president of Coldwell Banker Warburg, noted in his latest report, “Throughout the second quarter, that slowdown has accelerated: fewer signed contracts, fewer bidding wars, more price reductions, and a gradual increase in available inventory.” Translation: Look out below!   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Ahead of the tape, Lou Basenese Founder & Chief Investment Strategist   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 301 S. Perimeter Park Dr. Suite 100 Nashville, Tennessee 37211 [Update Subscription Preferences]( | [Unsubscribe from this list]( RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. Please use this research for the purpose that it's intended — as research only. 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