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First Major U.S.
Markets to Turn Negative
Many real estate pundits have been pounding the table for years that the U.S. real estate market is on the verge of collapse.
They were wrong then, and they’re wrong now.
First off, there is no such thing as a “U.S. Real Estate Market.”
You can only invest in specific, local markets.
There are 400 major metro markets. They account for more than 93% of all U.S. real estate.
EACH local market is unique.
Some are emerging, some are red hot, and some are sucking wind RIGHT NOW.
As an investor, what matters is YOUR local market, not some national average of all 400 markets.
Having said that…
There ARE some big ‘failures’ this quarter you should be aware of.
Here’s a screenshot of our “Market Tracker” tool showing the EIGHT markets that fell out of their WEALTH PHASE this quarter.
(If you don’t know what a Wealth Phase is, you can read about it here. It’s a BIG DEAL when a major market enters or exits a wealth phase.)
Note that San Francisco and Seattle exited their Wealth Phase in the most recent quarter.
Both markets were bellwethers back in 2013; they were among the first major real estate markets to turn around.
Could these markets now be signaling what’s ahead?
Here’s what their charts look like:
San Francisco real estate gained a cumulative 86% total appreciation (69% when you adjust for inflation) since it entered its Wealth Phase in 2013.
Seattle gained 82% in total appreciation (66% when you adjust for inflation) since it started its wealth Phase.
Now they’re both starting to LOSE some of those gains.
All real estate cycles eventually reverse; Appreciation becomes DEpreciation.
That’s why they’re called CYCLES!
In the first screenshot above, you’ll also see that 4 of the 8 markets falling out of their Wealth Phase were in California. This should come as no surprise if you’ve followed HousingAlerts for very long. We noted the California weakness several years ago.
Using our S.T.A.R. Momentum Indicator, here’s what we saw in California as early as 2016…
Think of these Red, Yellow and Green icons as ‘traffic lights’ – so long as they stay green, you’re in good shape.
If you start seeing RED replacing GREEN, especially going from left to right over time, it means momentum is weakening.
These momentum indicators are pretty good at predicting major market changes, often years in advance, as it did above for California.
Except for Chico, CA, almost every other major California real estate market is doing poorly relative to the rest of the country.
It’s been said: “California sets the trend” when it comes to real estate.
I don’t buy-in to those types of generalizations, but California WAS an early participant in the last two major market upswings and was also on the leading edge of the last major downturn.
The good news is…
You don’t have to trust your retirement to conjecture; with HousingAlerts, you can eliminate the guesswork and rely on cold hard data.