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The latest Case Shiller housing index report has come out. It is strongly confirming the analysis that I have been giving for the housing sector. If you are interested in single family real estate investing, you will be interested in this report.

Right now the Case Shiller 20 city index has enjoyed a 29 month rise that has been quite spirited. The index rose 29 percent over that period. That basic statistic sounds really good. Most analysts think that means the sector is healthy and will likely maintain the trend into the future.

Case Shiller 20 City Index

 

I couldn’t disagree with them more. From an Elliott Wave perspective, the entire movement in price that began April of 2009 is a perfect corrective wave called an expanded flat. The odds are quite high that the bull move in price ended back in Aug of 2014 for the index. If you are not familiar with the fact that markets follow a specific pattern and you require a story to accompany a housing crash prediction try some of these?

Mortgage lenders are moving back to the no money down loans. Appraisers are being pushed to inflate values according to a survey of appraisers. The rate at which people are pulling equity out of their homes for consumer spending has jumped 100% in the last two years. Does all of that sound familiar?

If I am correct that the move up in price is over, that means prices will fall. The question becomes how far? A larger perspective must be taken with regards to the history of housing prices in order to answer this question. Once again, I will look to Robert Shiller's data to help make that determination.

Schiller has data on home prices going back to 1890. Every single movement in that history of price is relevant to what is coming. Again, from an Elliott Wave perspective, the peak that

Home Price Index

occurred in 1894, when the indexed stopped at almost 124, is the most likely point to target. I think prices will fall to that point at a minimum and perhaps 107 at a maximum for the fall. This equates to a 29 to 38 percent drop in the index before housing prices find a bottom.