If James Stack’s predictions are correct, 2019 could be a tough year for the housing market.
Stack, who predicted the 2008 real estate crash and warned of last year’s housing slowdown, told Bloomberg the worst is yet to come.
“Housing could be heading for its worst year since the last housing market crash,” Stack told Bloomberg in a phone interview. “Expect home sales to continue on a downward trend in the next 12-plus months. And there’s a significant downside risk to housing prices if a recession takes hold.”
According to Bloomberg, Stack – who manages $1.3 billion for wealthy investors – studies bear markets dating back to 1929. Just before housing prices reached their peak in 2005, he predicted the real estate market could crash. Last year, he “noticed his “Housing Bubble Bellwether Barometer” of homebuilder and mortgage stocks was up 80 percent in a year, a sign that investors once again had gotten too ‘exuberant.’”
As to whether the housing market is in a bubble, Stack says it all depends on what happens with the economy.
“Unfortunately, bubbles are only recognized with 100 percent certainty in 20/20 hindsight,” Stack told Bloomberg.