Thursday, August 03, 2006

Good insight into the real estate bubble

I have continually maintained that the concept of the real estate bubble is relative. In areas of significant over-inflation a price correction is inevitable. Conversely, in areas where there is still economic growth, new jobs and people moving in, housing prices will continue to rise. Think of it as regional supply and demand; economics 101 without the real world caveats.

With that in mind, Al Heavens posted a great article in Realty Times today about the cyclical trend of real estate. A link to his article is here. Al makes a compelling argument that this is merely another part of a continual cycle:

“Real estate is cyclical, and, whether booming or slowing (the official housing industry word is "normalizing"), it, too, will pass.”

In my personal experience, the real estate industry cycles over a ten to twelve year period. How did I reach this conclusion? Just look at housing prices are rates of change over the past sixty years.

So now that prices have shifted, it is time to adjust real estate agent marketing strategies to take advantage of the shift in the market. More on this at a later data.

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