Step 2: Use the stock market as an indicator

What we’ve learned is the stock market can predict a housing crisis long before the crash occurs. It’s also important to remember that real estate and housing stocks follow the leading indicators we’ve utilized and not the stock market as a whole because the former is the most accurate barometer of housing sector health.

In the U.S., the S&P500 index is the main barometer of the economic health, composed of the top 500 U.S. blue-chip companies — some housing related.