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This morning, while I was on an early morning hike, I was chatting with a realtor and I mentioned that it looks like prices are starting to pull back a bit. He immediately fired back at me, defending the price of homes and saying that now is a great time to buy, interest rates are low, and prices are going to continue to rise as we get closer to the summer. Understandably, it seems to always be a great time to buy when I’m talking to realtors. Conveniently, it’s also always a great time to sell. Of course, their interest of collecting a commission isn’t always 100% aligned with what is best for the buyer, and falling prices will cause buyers to be reluctant to buy and sellers to be reluctant to sell. So realtors don’t like falling prices.

The one comment I made to him is that it’s very sad that the average income cannot afford to buy an average home in many of the major cities in the U.S., and we left the conversation at that since he seemed to start getting uptight and incapable of having a reasonable conversation without erupting with emotions.

That one conversation gave me all the inspiration I needed to come home and write, and the underlying idea of this article is that America is tapped out. The housing market is overpriced, and so is the stock market for that matter. The Dow Jones is over 18,000 points, the S&P is over 2,100, and the NASDAQ as crossed the 5,000 threshold for a moment this week. We know the government has been pumping the system with hot air because American households have reached their max.

Consider this: just going back 40 years, America was a one-income household and savings rates were as high as 11%. In 2006, mainstream economists would call us more prosperous and say we have a higher standing of living. But if we look at today’s America, we see two people working and saving nothing for a rainy day. After a horrible downturn in 2008, we’ve seen a little resurgence in saving, but nothing extraordinary. Today, Americans save a measly 4%, with both parents working and the children mowing lawns after school.

Unfortunately, households are spending all of dad’s income and nearly all of mom’s income as well. This means that the cost of living has gone up for families that are enjoying the same standard of living that decades ago only took the one income. Because of this, there isn’t room in the typical budget to purchase new homes or fuel corporate profits, for that matter, which would push stocks higher.

As for the realtor’s assumption that prices will just continue to rise blindly in the short-term, I just don’t see it. I think real estate and stocks as long-term holds are fine, especially when you are disciplined and only buy discounted value, but as a whole, the underlying economy is tapped out and the euphoria of buying just because prices are going up has died off as well.

That happens in all bull markets; people get themselves into situations they can’t afford just because they don’t want to miss out on price appreciation. Of course, this can only last so long until affordability truly causes prices to top out and prices do in fact correct downwards. This is an inevitable cycle that we are seeing in both stocks and real estate, and caution should be taken before getting into either one at this moment unless clear value is truly presenting itself.

Don’t expect a salesperson working on commissions to always be straight with you, because according to them, there will be no greater time than now.

As we tread forward into 2015, I would recommend having some cash on the sidelines waiting for a pullback in stocks and/or real estate. 20-30% corrections are not unreasonable, and if you can capitalize on this opportunity, a great deal of money can be made.

This isn’t a suggestion to sell your good investments and stop investing completely until a crisis occurs, it’s just a suggestion to be liquid enough for when a great opportunity presents itself, you can act.

That great opportunity could be here sooner than you might expect. For more actionable investing ideas, be sure to check out the Smart Money Membership. Right now, all new members are receiving a silver eagle mailed to their door just for trying.

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