By Elliott Wave International
Imagine the common stocks of residential real estate developers D.R. Horton or Lennar Corp dropping 98%. What would that imply for US real estate? Back in 2022, Elliott Wave International's Global Market Perspective warned that China real estate developer Country Garden Holdings “is becoming a bellwether of contagion risk.” Here’s a June 2025 GMP update:
Country Garden shares hit a new all-time low of 38 cents a share this week, down 98% from its January 2018 peak:
The continued bearish potential is accentuated by calls for an imminent restoration of the Chinese housing boom. In recent weeks, for instance, The South China Morning Post finds a “more upbeat tone among property analysts.” When five repossessed homes recently sold at auction for multiples of the minimum bid, a Chinese news service called the “Sky-High Bids for Foreclosed Homes” a “Hint at a Real Estate Rebound.” One of the many bullish voices on China’s housing market holds that a “cocktail of conditions” will drive the “structural property market recovery.” The South China Morning Post attributes this “positive mood” to a “broader reassessment of China’s economy.” We rate this as too much optimism, too soon.
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This article was syndicated by Elliott Wave International and was originally published under the headline That Can't Happen Here -- Can It?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
