Gradually… Then suddenly.
That’s how the 18.6-year real estate cycle unfolds.
You can’t see it at first… it moves behind the scenes, quietly.
Meanwhile, everybody else is preoccupied with the loudest bit of financial narrative.
Interest rates… economic growth… banking crises… the topics come and go, leaving investors confused.
But as the end of the cycle approaches, everything changes.
You see signs of it everywhere… data telling you that it’s close.
At some point, it becomes so hard to ignore that even mainstream media start paying attention.
(Not that they really know what’s going on… to them, it’s just the latest and loudest bit of the grand economic narrative.)
Here’s an example.
When you understand the land market, you see that we have a repeatable and precise 18.6-year real estate cycle.
Here’s How the Cycle Works
Fourteen years up, four years down. It really is that easy.
That’s why I don’t worry or stress… nor do I buy the negativity in the news all around me.
Instead, I wait for the news to catch up to where we should be according to the cycle.
The U.S. mortgage market is unique because most home loans are 25-30 years in length with a lifelong fixed interest rate.
With interest rates above 7%, it’s easy to see why those who borrowed funds at 2% aren’t that keen to sell and refinance at much higher rates.
Here’s the thing…
Every previous cycle, something happens that starts to tip the balance. (And we’re just about at that point now.)
The sentiment, once negative and polarizing, begins to shift.
And the author of this article is one among the very few who have noticed.
From that article above:
Call it a perfect storm, a classic squeeze play, or maybe just one wildly stressed marketplace. But the unique combo of mortgage rates shooting up to their highest in a generation, a near-historic lack of available homes on the market, along with the resiliency of some buyers eager to find a way into homeownership no matter what, has led to the pace of homebuying picking up in many parts of the country.
What’s going on? Those who can still afford to purchase a home are in a rush to beat the competition.
“People are finally wrapping their heads around these high rates,” says Matthew Roland, the assistant dean at the University of Buffalo’s Department of Urban and Regional Planning.
Here are those locales where homes are selling faster today than 12 months ago.
It is something that takes its time to come, and then, suddenly, it changes.
The sentiment changes from “interest rates are simply too high for me to afford a mortgage” to “if I don’t buy today, then it will simply be even more expensive 12 months from now.”
This is where we are today.
Recall that since 2010, the U.S. has been short more than 5 million new homes.
With supply-side inflation now falling away, home developers are ready to step in and meet this enormous demand.
All that’s left now is for demand to rise. Seems we are about to witness the cusp of the next wave of buyers materializing.
This is the real estate cycle.
And hence, the greatest boom of all time awaits.
So, what are you waiting for?
My members are already benefiting by being ahead of the news and empowered to make those life-changing investments before either the media or the rest of the investment community is even aware of it.
You can join them, and me, right here.
Editor, Cycles Trading with Phil Anderson
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