Asianautica, thank you for taking the time to post this. The OFHEO median you showed is the accurate median, the one everyone should be using. (But NAR’s median, the one reported in the media, is plagued with problems. ) In the first cycle, I see that you have to wait for the median to be in a new direction for 2 consecutive quarters, if you check the quarter-over-quarter median. In this cycle, the median has been increasing every year; I don’t see a change around 2000; it keeps going up. We need to see not a slowing in rate of increase, but an actual decline. Anyway, I did not consider using median but I should add this to the model: 2 consecutive months of changed direction in the OFHEO median. Thanks for giving me this information.
The 3 indicators in my model are months inventory, realtor experience, and a change in HAI. Do you know if those 3 combined would have given a false signal at those 2 times you mentioned?
If you find evidence that my model does not work, then I will reconsider my strategy, definitely. Until then, from how I understand real estate, this is the best I’ve got.
As far as real estate responding to geopolitical shocks and high oil prices, do you have any examples from history that there were any “dead cat bounces” in real estate from such things? Real estate prices are historically linked to employment. Only during recessions have real estate prices fallen. Whenever people are employed, they can make their mortgage payment. Housing rises with inflation. It is not like a stock.