Thursday, July 23, 2015

The Top of Housing Bubble 2.0 is Being Called

The chart and article above introduced me to the concept of Fibonacci Retracements.  As someone who has always been fascinated with the truth telling aspects of mathematics it was interesting to see yet another piece of evidence to show that it's never "different this time."  The FED was able to create a very temporary mathematical advantage that fostered Housing Bubble 2.0.  This quite effectively moved distressed inventory from the banks to private equity.  With Mission Accomplished, so to speak, we are now ready to see the first FED rate raise in almost 9 years.  Isn't that amazing to ponder.  A whole group of Johnny-Come-Lately specuvestors are about to face a smidgen of economic reality.  What level of velocity will power this correction.  After all, we are less speaking of families looking to stay in their homes than we are of institutional investors and REITs whose cap rates are about to be destroyed through demographic and interest rate changes.  Houses are about to get cheaper as the cost of money gets more expensive.  Specuvestors have left the market.  Young families never entered it.  Some Boomers who may not live to see the next market top will be looking to cash out before any further declines.  And lest we forget the world economy is on the brink of sustained contraction if Oil Prices, Caterpillar sales and the Chinese stock indexes are to be believed.  Doesn't seem to me like it's a great time to buy a house you can rent for 20% less...

Note: Just getting this thing started but I'm gonna try and up the amount of posts.  Anything you guys might find interesting let me know in the comments!


  1. I was actually doing this the other day...comparing the last run up to this run up. Eerily similar. And I was reading something on zero hedge about there are echo bubbles...but there are no third bubbles. Fool me once, shame on you. Fool me twice? Not going to happen...and so when this bubble does burst, there's going to be a MUCH bigger psychological impact than after the first bubble burst. "Oooh, the first was just a fluke, it can't happen again!" But when it does, people are going to be very wary moving forward.

    And the Dow is basically flat going back 8 months. I find that very interesting also. The non-stop UP is over.

  2. Might want to check text color on mobile. Really hard to read. Think it was fine on desktop.

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