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Posted about 9 years ago

Market Cycle Charts with a little more detail

Brandon wrote an introductory piece on market cycles that was good but could have benefited from a chart that wasn't hand  drawn for a visual. I had recently sent him a report with some nicer charts (you can see them here) but for a quick look at different ways of visualizing the market cycle check these out:

This one is from IRR, Integra Realty Resources:

Normal 1425686057 Apartment Market Cycle

or this one from Matthew Gardner that illustrates the lag between demand and supply:Normal 1425686016 Aparment Building Investment Cycles Gardner Economics

Brandon's sketch showed a horizontal line but he didn't explain what that was; for income properties it represents the long term occupancy average:

Normal 1425686331 Glenn Mueller Re Cycle 1

What the chart is tracking is occupancy; for more on that see the report I linked to above. 

If you are looking at spec building homes or developing commercial real estate then you want to track sales prices vs. the cost to build or what in CRE is called 'replacement cost' which is sometimes broken out as replacement rents:

Normal 1425686604 Real Estate Cycle Three Phase

My personal favorite because of the truth in the humor is one Tom Barrack at Colony sent me:

Normal 1425686706 Cre Cycle Colony Capital

If you want any more detail on market cycles let me know.

Good hunting-

Comments (4)

  1. if I had to wager, I would say we are in the ninth inning or extra inning. Ironic, because now, as in 2006/2007, the Fed started rachetting up interest rates. 

  2. Great explanations with these charts. So... where are we today?  Hypersupply?  Euphoria?  

  3. Thank you so much for this !

  4. Insightful. Thanks!