US real estate is dramatically overvalued and formed a bubble due to supply constraints. Now that the bubble is popping, the prices can tank down like a rock. I will buy some puts if we can see this pullback play out. Otherwise I will wait patiently for another chance. I'm not long here, just a wolf waiting to feast.
The real estate market is nearing the top of a huge ascending wedge. Bearish divergence is also apparent in the RSI of this monthly chart. We should be looking at a correction before the end of the year. Could be significant.
The "Real Estate Market Cycle" is made up of four distinct phases.
There isn't an exact length of period of time each phase must last, but taken as a whole, the entire cycle averages 17 to 18 years from peak to peak.
Looking at the previous cycle (1989-2007) we can use Fibonacci and geometry to see where we currently...
If you take a look at the behaviour of the REI index before, during, and after the 2008 recession and present day. The REIT is in blue, the S&P500 is in red.
REI index is outpacing the S&P500
REI index is converging with the S&P500
the indices both fell together with the REI falling more aggressively