Some say the 18.6-year property cycle won’t repeat.
One of the biggest arguments against it I hear is: how can property become even more expensive when people can’t afford to buy a home now?
But each generation has faced the fact that property prices go up.
Let’s take a step back in time for a moment…
How Did We Get Here?
When the U.S. was just getting started, do you know how much land was deemed “enough” for people?
A quarter acre? Imagine if your plot was that large! How about 1 acre, maybe 2?
Well, sit down for this one…
The actual recommended size of a U.S.homestead “back in the day” was 160 acres.
This was proposed by President Jackson in the late 1820s but wasn’t enacted until Lincoln became president in 1860. And even better, it was free if someone agreed to stay on it for five years, turning it into productive land!
How about today? Well, instead of a homestead – now seen as too much trouble to maintain – take a look at these ideas from around the world…
From Homestead to Shoebox
First, if you can’t afford a whole house, how about half of one? That’s what a community has done in Chile – not known for its housing problems, I know, but that’s a solution people have come up with.
Or, if you want to take modern “boxy” homes to another level, how about living in a shipping container or two? It may not be as bad as you think if you get really creative (oh, and have enough land to build on)…
We’ve had the rise of people living in luxury vans… the rise of dual- and triple- income households, 50-year mortgages aimed at lowering monthly payments, and other “measures” and “trends” to manage the costs.
On the one hand, we can celebrate the ingenuity many people bring to the situations they face.
My tone may be somewhat flippant, but there is a serious point to this. In every cycle – and I mean every cycle – people at the time couldn’t imagine how house prices could possibly go higher.
And yet they did. People found more ways to deal with the “shortage.”
But house prices have always gone up.
Through generations and centuries.
Except when the real estate cycle is ready to turn. And you can quite easily prepare for those time periods well in advance.
Editor, Cycles Trading with Phil Anderson