Eq: Real Estate

(New York)

If you think the real estate market is bad now, just wait. That is the argument from James Stack of InvesTech Research. Stack accurately called the last housing crisis and also forecast the slowdown in 2018. Now he is saying that 2019 is going to be the worst year for a long time. “Expect home sales to continue on a downward trend in the next 12-plus months. And there’s a significant downside risk to housing prices if a recession takes hold”, says Stack. He does admit that it is too hard to say if housing is currently in a bubble, but that prices are very likely to fall.


FINSUM: Mortgage rates have risen sharply and prices are quite elevated, so it is no wonder prices have fallen. However, real estate hasn’t seen the exuberance it did pre-Crisis, so we do not think this will be a meltdown by any means.

(New York)

Real estate has been the metaphorical whipping boy of data releases this year. The market has been largely slumping for months, with home sales mostly slowing as rates rose. Now more data has been released, and despite generally bearish sentiment, the numbers still surprised to the downside. In the month of November, pending US home sales felling a whopping 7.7% from a year previously. To be clear, pending sales mean signed contracts to buy homes (closings are usually 45 days later), which mean they are a good leading indicator.


FINSUM: Is it any wonder that four rate hikes this year have hurt the housing market? The question is whether the same will happen to the economy and real estate is just showing the effects first.

(Los Angeles)

Real estate has been weak for several months now. Even back in the summer when the economy and markets appeared to be humming along, real estate was one of the sore spots for investors and the Fed. Well, the state of the market is becoming more apparent as new numbers from November show that existing home sales feel 7% from last year. The drop is the largest year over year fall since May 2011. Sales have declined in every month in 2018 bar one.


FINSUM: The worsening real estate market is a bit of a conundrum given the state of the labor market. Leading indicator?

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