New York is the First City
to Give a "Sell Signal" since 2012
Things are starting to get interesting in the U.S. housing markets. The current real estate boom that followed the 2006 crash is starting to show it's age.
The September 15, 2016 issue of The Campbell Real Estate Timing Letter was recently sent out to my subscribers -- and here are a few highlights:
1. New York is the first U.S. city I follow to give a "sell signal" since 2012.
Could this be the canary in the coal mine for the entire U.S. housing market?
2. The U.S. housing market has started to soften in the last 2-3 months. But the five
key indicators I use to track trends still tell us the party isn't over -- at least yet.
3. The global stampede for positive yields has taken U.S. interest rates to all-time
record lows. The current rate on the 10-year U.S. Treasury Bond (1.36%) is almost 70% lower than its long-term average.
Interestingly, a popular yield-focused index (the U.S. Utility Sector) recently climbed to a level that was 3 standard deviations away from it's long-term average. According to hedge fund titan Jeremy Grantham, events like these only occur about every 1,200 years or so.
Like a rubber band, does this mean interest (and mortgage) rates have been stretched too far to the downside and are getting ready to snap back in the opposite direction?
Does this mean that investors (and property owners) should prepare for rates to start rising and revert back to their long-term mean?
I don't know -- but when you live by the sword (falling interest rates), the U.S. housing market will also die by the sword if rates start rising from these record low levels.
4. The San Francisco real estate bubble - revisited.
San Francisco housing prices have had a truly meteoric rise since 2012.
Would the great value investor Warren Buffett -- who is one of the most successful
investors (and market timers) of all time -- invest in the San Francisco real estate
market right now?
Chances are high that Warren's answer would be a resounding "no."
So buyers beware: the greater fool theory is not a good investment strategy.
If you are not a subscriber and want to purchase the September 15, 2016 issue of The Campbell Real Estate Timing Letter,Click HERE.
To read a sample issue, Click HERE.
Comments/questions are always welcomed - and you can send them to Robert@RealEstateTiming.com