This Could Be the First Measurable Sign of the Inflating Real Estate Bubble V 2.0

Good Morning,

As I shared with you at the end of last year, I estimated a housing bubble forming and that the “break” of the bubble would become “official” by 6/20/20.

The link below is a short article out of Housing Wire recently and I believe one of the strongest measurable events of the first canary to die in the coal mine, warning that the bubble is real.  In 2007, this same market was one of the first to begin the bursting of the 2008 bubble.  This market in 2017 appreciation was more than double the national average at 11%.  This same market started the first quarter of 2018 even hotter.  In King county, location of Seattle, single family property values increased in the first quarter approximately 9%.  Too hot.  Now as we finish the second quarter and get ready to begin the third quarter of 2018 we see the most recently reported, May 2018, largest addition to supply (Homes Listed For Sale) for this market.  The May 2018 new home listings topped the previous high, which ironically, was May of 2008.  This market is considered third in the country as one of the hottest housing markets both in 2017 and 2018.

In addition to this market, I think there are six other markets to watch closely (they are in the top 10 housing markets).  In this order;  Portland OR, San Francisco CA, Austin and Dallas TX, Nashville TN, and Raleigh and Charlotte NC.  As in the fourth quarter of 2006, the bubble began its burst in the northwest and went down the west coast then headed east.  In this bubble I believe FL (south) will occur after we see the signs in the new south, Nashville TN and NC.

Gaining market share with caution is important. Let’s watch this closely. I hope I am wrong with my projection of Bubble V 2.0.  But as time continues to move forward, global and national macro data, the political environment, the recent slowdown of interest rates increasing (Dallas Federal Reserve Chairman’s comments that the Fed would in all probability not see the short term rates increasing as was thought to occur.  He further stated that we may not see any significant rate increases until 2019), in all probability the 30 year bench mark rate should be approximately 5% as compared to recent estimates of near 6% (Most notable of those projections was Jamie Dimon, of JP Morgan Chase, 2 months ago predicted that we could see the 30 year bench mark rate at 6% by year end.  At the same time he stated that we would experience a housing bubble again, in 2020).

I hope you find this data and opinion helpful.

Best Regards,

Ron

LINK: Housingwire Article

 

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