Real Estate Cycle Time

[Danny Day]

I've been meeting with a client who is a financial trader, and he has been educating me on market cylces for everything. Bonds, stocks, gas, natural gas, etc. He believes that by reading graphs, you can predict where the market will go within the next X number of years.

I showed him this graph:

and he thinks we're near the fear stage. His prediction is that values fall another 20-30% before they hit the bottom, which he believes will be 2016. He thinks the next peak will be around 2032. This is based off the 17 year cycle of the stock market.

From his theory, he believes that stocks will drop / raise first, and then real estate follows 3-4 years after.

Your thoughts?

[Tod R.]

I'd be interested to hear what our resident economists have to say. It seems to me that timing is everything. Even if we are following the cycle, we sometimes don't realize where we are until a recognizable trend has passed us by. As far as RE goes, I think we've gone through a panic phase. Now maybe we're not finished in a longer term cycle. I do think we have a perceived window for housing with rates as low as they are and the economy currently having an uptick. However, given the "shadow inventory", it'll be a while before SFH is healthy nationwide.