Proof That Real Estate Markets Are Cyclical

October 19, 2011

I have been doing a massive personal project of sorting through all the boxes of saved stuff in my garage. I came across a booklet published by the California Association of Realtors. The head line caught my attention as it is so similar to editorials and news articles of published this year. When I opened the pamphlet, I found that it had been published in 1989.

Do you remember 1989? We were in a market of rising prices and there were fears that the next generation would never be able to afford a home.

The booklet had some predictions about California demographics and growth that were eerie in their accuracy. Much of the analysis could have been written in 2005.

Interestingly, the issue that most concerned C.A.R. in 1989 was the rise in the cost of housing that priced many Californians out of the market. However, as in 2005, the market made an adjustment and in the mid 1990s, prices dropped, foreclosures were prevalent and the bottoming out of that cycle probably occurred around 2001-2002.

Just reading the analysis and then knowing what occurred in the next 22 years substantiates my belief that this market will recover, but it will take time.