Wed. Dec 25th, 2024

The Case-Shiller Home Price index is out at SPGlobal.com and you can review the latest information but we wanted to model a forecast so we created a couple of charts.

First we generated a Case-Shiller chart and used the 2004-2009 bubble and correction as a template for our forecast. We added the Fed Funds rate because as you can see from 2005 thru 2007, the Fed was hiking rates similar to what the Fed has been doing from 2022 thru 2024.

We don’t know for sure if the Fed will keep hiking or cutting so don’t use this forecast model to make any investment or financial plans but if history repeats then it’s plausible that housing begins a correction to the downside from 2025 thru 2028.

Here’s what the chart would look like:

In an eerily similar run from the roaring 1920’s thru the Great Depression, we seem to be following a similar pattern. Will we start another Great Depression starting October 24, 2029?

A lesson from the Great Depression was a crash that started on October 24, 1929 when the Dow Jones dropped from 381 to 198 then rose in 1930 returning to 294 on April 1930 only to decline steadily to a low of 41 in 1932.

A similar pattern in 2029 may have the Dow crash from 38,852 to 19,800 then rise in 2030 back to 29,400 only to decline again for the next decade down to some unknown low.

This is all pure speculation and there is no way to know what will happen next but the parallels to a century ago are remarkable.

We’ll keep an eye on Case-Shiller so stay tuned, stay profitable and stay solvent…