From the course: Pre-investing: Before Investing in Real Estate
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The next bust? - Microsoft Excel Tutorial
From the course: Pre-investing: Before Investing in Real Estate
The next bust?
- Perhaps the most surprising aspect about real estate cycles is not that every stage is inevitable but that it's actually highly predictable. An economist named Homer Hoyt, through a detailed study of Chicago and broader U.S. real estate markets, found that the real estate cycle tends to run in a steady, 18 year rhythm since the 1800s. Now, there has only been two exceptions to this rule. World War II and a mid-cycle peak that was created by the federal reserve doubling interest rates in 1979. Yes, if the feds double interest rates, it will effectively crush any expansion in a real estate boom cycle. Now, outside of that the cycle has been remarkably consistent. In fact, it's kind of hard to believe. Take a look. All right, so here what we're looking at are historical land values, peaks in land value. Which is really good gauge for the peaks of the overall housing market and real estate market. So these are just land values, and here is peak and construction cycles, that's when the…
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