Most investors are great at missing the tops and bottoms of the market cycle.
No wonder… They rely on noisy numbers such as inflation, consumer confidence indexes, or commodity prices.
They mostly ignore the numbers that drive the economy and the markets.
And that’s what has just happened.
One of the key numbers that helps me understand the 18.6-year real estate cycle was updated.
And I have good news for you…
I See More Growth in the Markets
While it’s fashionable to profess gloom and doom, I am not a pessimist.
Yes, sometimes markets go down, and the 18.6-year real estate cycle has so far been great at helping me time these changes.
But we aren’t there yet, and here’s why.
From Barron’s:
The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 6.5% from a year earlier in March, the same as the prior month, according to data published on Tuesday.
“On a seasonal adjusted basis, national home prices have reached their ninth all-time high within the past year, with all 20 metropolitan markets posting positive annual gains for the fourth consecutive month, indicating widespread and sustained growth in the housing sector,” said Brian D. Luke, head of commodities, real & digital assets at S&P Dow Jones Indices.
House prices – and land – are key drivers of the economic cycle. And they are growing fast.
While everybody else is focused on high mortgage rates (which, in theory, should drive home prices down), the 18.6-year real estate cycle is pushing home values up.
And even though the S&P home price index is at all-time highs, I don’t see home values dropping anytime soon.
Why?
This Isn’t the Time for the Cycle to Turn (Yet)
During this cycle, home prices have bottomed in 2011. That means we could see years of home price growth before the cycle turns.
And when the Fed and other central banks start cutting interest rates (the European Central Bank has just announced that it’s ready to do so), this chart could look even better.
The U.S. housing market defied all “expert” expectations and continued growing after a short pandemic-related slump.
You can’t tell from this chart when the Fed started hiking… which is my point.
The housing market doesn’t have as much to do with central bank officials as some investors think.
The 18.6-year real estate cycle has more power over land, homes, and other assets than monetary policy, inflation, or anything else.
My readers know it. And they know we’re in for years of growth and profits.
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Phil Anderson
Contributing Editor, Inside Wall Street With Nomi Prins
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