Real Estate Cycles: Where Are We Now?
Real estate prices, as with most financial markets, tend to follow a pattern. For the purpose of this article, we’ll call this pattern “The Real Estate Cycle.” There are many theories out there about The Real Estate Cycle, but the one I like best is called “The Great 18-Year Real Estate Cycle.”
Back in the 1930′s a real estate economist named Homer Hoyt discovered that real estate prices seemed to ebb and flow on an almost perfect 18 year schedule. Hoyt’s theory was later used and refined by now famed economist Fred E. Foldvary to predict the real estate crash of 2008. I’ll get into more depth about “The Great 18-Year Real Estate Cycle” shortly, but to me the important part isn’t necessarily the 18 year time frame, it is understanding that the real estate market operates in a fairly predictable cycle that can be seen and taken advantage of by smart investors.