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The Great 18-Year Real Estate Cycle

As you may already know, the real estate market is cyclical – defined by ebbs and flows that might seem completely arbitrary to individuals without a lot of background or knowledge in real estate.  Whether you consider yourself a novice investor, or an experienced one, “The Great 18-year Real Estate Cycle” should interest you.
In the 1930’s, a real estate economist by the name of Homer Hoyt discovered a semi-consistent real estate pattern that occurred about every 18 years.  While this pattern is not without flaw, it does provide an understanding of what indicators market-savvy investors can look for to determine where the market if headed.

Using the above chart, you will undoubtedly notice a huge discrepancy between 1925 and 1973.  However, Fred E. Foldvary used this chart to predict the housing market crash in 2008 in his now famous report, The Depression of 2008.  Here are some key excerpts from Foldvary’s report:
The real estate cycle world-wide follows a consistent pattern. There is first an expansion of money and credit by the monetary authorities. That expansion artificially reduces interest rates, which then increases borrowing for long-duration capital goods such as real estate construction, as well as the purchase ... more

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