Here’s Evidence That “the Great Property Bust is Underway”

By Elliott Wave International

It’s always good to get ahead of a trend and not wait until it’s obvious to everyone.

Consider the subprime mortgage crisis of more than a decade ago. As you’ll probably recall, it took most investors by surprise, even seasoned financial and real estate professionals.

Indeed, long before the phrase “mortgage meltdown” was capturing the headlines during the 2007-2009 financial crisis, the monthly Elliott Wave Financial Forecast, a publication which provides forecasts for major U.S. financial markets, warned subscribers about the real estate market. Here’s a chart and commentary from the March 2005 issue:

Back in the 1990s, The Elliott Wave Theorist designated Japan’s developing deflation as the best available model for the U.S. The figure shows the plunge in commercial, residential and industrial real estate prices since the Japanese stock market peaked in 1990. … The Japanese real estate experience will be replayed in the U.S.

Of course, we all know what happened regarding the real estate market collapse in the years immediately following that analysis.

Now, the Elliott Wave Financial Forecast is providing another warning. Here’s a chart and commentary from the August 2020 issue:

As for the anticipated fall in property values, the Green Street Commercial Property Index shows that it is right on schedule. Home prices are still buoyant, but sales are down from the beginning of the year, and we continue to believe prices will follow.

So, it wasn’t surprising to see this Sept. 18 Bloomberg news report headlined “A $700 Million Commercial Mortgage-Backed Securities Portfolio Is On the Brink of Collapse”:

Bond investors who wagered on a group of malls … are starting to take losses.

The commercial-property bond, known as Starwood Retail Property Trust 2014-STAR, is backed by an almost $700 million defaulted loan.

Elliott Wave International’s analysts expect that consumers of financial news will be seeing the word “default” a lot more.

As the 2020 edition of Conquer the Crash predicts:

The next wave down in real estate prices will be even deeper and more prolonged than that of 2006-2012.

Elliott Wave International’s analysts expect that this next wave down in real estate will be a part of a larger deflationary depression. Your prospects for financially surviving such an episode will increase substantially if you take key steps.

Elliott Wave International has put together a report to help you prepare and it’s titled “What You Need to Know Now About Protecting Yourself from Deflation.”

You can access it for free when you become a member of Club EWI, the world’s largest Elliott wave educational community. Club EWI membership is also free.

You can have this free report on your computer screen in moments by following this link: “What You Need to Know Now About Protecting Yourself from Deflation.”

This article was syndicated by Elliott Wave International and was originally published under the headline Here’s Evidence That “the Great Property Bust is Underway”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.