I recently read an economist view on the current events in real estate. He charted all the way back into American history and came up with an interesting result! Real estate is a cycle of booms and busts, and the cycle is 18 years. There are many factors that contribute to the cycle, but ther run up,and cool off are very predictable. If you take the last bust of real estate it was 1988 add 18 to it and you get 2006. This is the beginning of the downside of the cycle. The cycle bottoms levels out and starts to rise again. I think the article raised some very interesting points. The 18-year cycle it is also Called the Long Cycle! What are your thoughts?
RE/MAX Paramount Properties 678-595-5283 Direct
Or 888-940-0074 Toll Free Office
Atlanta Real Estate Agents, Alpharetta GA Homes for Sale, Dunwoody GA Homes for Sale, Atlanta Real Estate & Atlanta Homes for Sale 
Gwinnett Homes for Sale
Atlanta Real Estate Blog, Cumming GA Homes 
Curious thing... Both articles are outdated? The one article is from 2005 and the long cycle article is horribly outdated by 10 years!! If the current trends continue based on the one article, the bust will be in 2010 not 2006 and they are primarily focusing on the UK and England in the article not the USA.
I'd be crazy to think the industry won't hit a bust, but to reply on these two articles as indication would be just as crazy.
Quote to live by "Get Informed - Don't Be Informed"
Article may be dated, but they were quoted very recently as economic theory. One would have to ask in real estate are we biased against negative news about our own industry?
Some of the articles that mention the theory are more recent. This one was in Forbes Magazine March of 2006, and talked about in May of 2006 in Fox News.
Do we feel the current place we are in our industry at the beginniing, middle or end of a cycle? I'd love to hear the resonses.
I don't know. This market there are some major differences. I feel it could be segmented. Years ago condominium ownerships was immeasurable. Today it is a much larger segment. Many economist have commented last year that that was the identified major segment to take the hit. That is where most of the overbuilding, speculation has taken place. Also, markets that did not have major run ups in prices were not high on the risk list.
We received a very interesting call today on one of our listings. It was a German national that asked about renting one of our listings. It is not for rent. The caller mentioned that her company in Germany told them not to buy any American real estate, that the markets here were crashing! That was one caller's words, not our own, but I listen when buyers speak.
When I was speaking in Nova Scotia in September 2006 at the Atlantic Connection, the headlines that weekend in the local newspaper was about the coming recession in the states in 2007. It make you wonder if we are getting all the news here, or are they selective about the news that is available.
I wonder if the media in other countries sensationalizes extremes like we sometimes see here. I just finished the book All Real Estate is Local by David Lereah. It makes sense that the local markets will vary in the rate of recovery. I've also heard that homes are difficult to come by in Grand Junction, Colorado because of the great climate, while we have definitely slowed down in other areas of the state.
It's interesting that you are getting information on the perception of our market from multiple places around the world.
First of all I fully agree with Lerah!
But remember when our dollar bill was backed by gold? There was value in the dollar because something (gold or silver) backed its worth. When the dollar was disassociated and disconnected from gold the worth of the value of the dollar became "FIAT!" The only thing that creates perceived value in the dollar is our faith in the dollar. We believe it has value os it has value. Other than faith in the dollar, there is no value.
Housing is similar except for the real estate has substance, land, houses, buildings, brick and mortar etc... so values can drop, or go up, but it never just evaporates. But one component is faith in value of real estate. So many times we hear statistics that just don't seem right. but they are all we have. Some may call it spin, and others would refer to it as a propping of dollars. No one ever wants to have a run on the bank so to speak because there is a perceived public panic. Everyone wants to cash in at the same time just like in the stock market.
That translates into no one wants to talk about or report about real numbers. It may spook the market!
The big problem with that theory, as I see it, is --- if you subtract 18 years from 1988, it leaves 1970....
The worst housing bust we EVER Had here in the Quad-Cities area of Iowa nd Illinois was from 1981 through 1986---- there were homes that literally dropped 50% in value during that time....
And, by 1988, things were beginning to rebound.... slightly...
And, in 1970, those were what we now call the "Good Old Days"--- lots of jobs, lots of new houses, lots of money....
Some areas will precede the curve some will lag. The same way in this currrent last run up of real estate in the US - some areas showed double digit gains in real estate prices like the DC area, and areas like Atlanta stayed relatively flat in appreciation during the same time-frame.
So my expereince was different. In 1988 the real estate market is DC collapsed. It was a year after the major stock market correction in 1987. In 1988 we sold our home in our neighborhood in Fairfax VA, and we were the last one to sell a home without a loss for several years. Our neighbors sold at almost 20% losses well over a year later. The Markets in Atlanta also peaked and collapsed in 1988. In 1992 the markets here were just starting to recover. 1992 is when I started working the expired listings. Many of them had been on the market for a few years. We used to make a joke with sellers that bought their homes at the peak, and had no equity... there was a joke in real estate when there was no equity in the home...have you seen the bumper sticker? "If Your Bought in '88 we can't help you!"
Corrections can also be of several types micro, macro: speculative, illiquidity - no demand for products, too much inventory that cannot be absorbed etc...
I have noticed in Houston we have very few homes that were built from 1986 to 1989; almost everything sold was a foreclosure during that time. When I first moved here and got in to real estate which was 1997 I had a listing appointment with a man who was still upside down from that period. It was a slow recovery.
Your market may be experiencing a slump, but people are ALWAYS buying and selling real estate. The reasons are many (job change, death in family, increase in family size, etc.). Concentrate on marketing to those who are looking to buy and sell, remain positive and work your way through it until the good times start to roll.
Steven, I am positive, and we are selling homes. I am just questioning a lot of the currnt articles in the press. Do they jive with your experience? Were you selling in the last markets?
Paula Thank you! I agree it is LOCAL!
I fully agree there is a cycle. The whole economy is cyclical. But currently, in my area, silicon valley, there
are still areas where people multiple bit and py 10% over asking price. People still think house price only go one way. I still remember when I bought my first house in 1990, I paied 12% interest, and yes, Huston real estate halved at that time!
http://mysite.verizon.net/vodkajim/housingbubble/
Anybody know where I can find a good house price chart for national or regional that goes back 50 years?
It is a business cycle! What no one is smart enough to talk about is that even though there are are corrections, prices over the long haul keep going up! If prices never rose from the great depression you could buy a home for $500! Even thoug pprices corrected in 1970 and 1988 they are still way up today! We have to think long term instead of short term!
Keling I was searching all last night for them. Could not find.