When it comes to the timing of the market, we all want to know when the market is at its peak or at its bottom. This is something we are always dying to know.
The truth is that nobody knows for sure, just like nobody can perfectly time the stock market, nobody can perfectly time the housing market. We can only analyze based on patterns in the past and the current economic condition.
One of the ways to look at the housing market is by looking at the interest rate. The current interest rate is considered pretty low while the housing price in the Bay Area is breaking record quarter after quarter. This is leading people to think that the housing market is reaching its peak.
However, think of it this way. If the interest rate is low and the housing market is at its peak or close enough, it can be a very dangerous situation. The Feds knows it. When the next crisis comes, according to Patrick Gillespie's post on CNNMoney, the Feds will be out of its primary weapon -- Interest rate cut.
From an economic perspective, you can't go to a gun fight without ammunition. The rate hike is going to take place before the housing market reaches its peak so that when the crisis happens, rate cut can be an option. The rate hike hasn't happened yet and although we are all expecting it to happen soon, it is more complicated due to the rapid changing international environments and the housing markets in the majority parts of America.
Therefore, I am articulating that the housing market still has rooms to grow, it may slow down its growth but it hasn't reached its peak yet. 2015 market is showing a sign of slowing-down, this maybe a sign for bull market of 2016.
