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When is the High, What is the low?

The Historical City |


| The Mortgage-backed Bond Bonanza

January 24, 2006

When is the High, What is the low?

Toddi Gutner

I’ve just spent several hours reading housing bubble blog entries and comments. It seems there is some general consensus from the American public (if there can actually be one on the world wide web) that the U.S. real estate boom peaked in the last 12-18 months-depending on the market--and the bubble is slowly leaking.

Of course, real estate is local, so it’s not every market in every state, but many of the cities people blog about (read: either live in or want to live in) wrote about some indication of a slide.

With that in mind, I’m brought to a comment on one my Hot Property colleague’s entries, Washington, D.C. Bubble? where Wes (posted November 30, 2005 at 2:51pm) asked, "What is the low and when is the high?"

Of course, we all know we can’t time the market. But, if we were to try, what does a typical housing cycle look like? Chris, who recently posted the following comment on my entry entitled “Deflating Bubbles, Tanking Markets," wrote:

"The way previous housing booms go, they hit a peak, sit close to that for 1-2 years as sales numbers plunge, then drop by some percentage for the next 1-2 years to get to a low in actual $$. Prices then languish for about 8 years, eventually getting to the low in real terms, before picking up again. That's 10-12 years, and has been repeated in US busts ('70s and early '90s), Hong Kong, Japan, your research if you don't believe me. The durations, and the amount prices drop, vary and could be larger if the boom itself was larger. The real driver for this response is probably more a confidence thing based on greed/fear in the population than any demographic effect. During the boom everyone sees 'value' everywhere, after the boom no one sees 'value' anywhere. Just look at the stock market now, compared with how you looked at it in 2000."

Do you agree with Chris that housing cycles are 10-12 years? If so, should buyers (read: investors) hold off until 2010 so they can buy at the bottom?

04:14 PM

Real Estate Culture

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Market Highs and Lows: A Prediction from The Real Estate Bloggers

The following is a personal thought sparked by Toddi Gutner at Business Weeks Hot Property Site. Toddi asked, When is the High, What is the Low? In this post, she is trying to understand the dynamics of this real estate cycle. I do not hav... [Read More]

Tracked on January 25, 2006 10:46 AM

Should Home Buyers hold off for 2006? from Pacesetter Mortgage Blog

Lansing, Michigan - I was reading an article by Toddi Gutner over at The Hot Property Blog this morning. Here was the question at the end of her piece:Do you agree with Chris that housing cycles are 10-12 years? If [Read More]

Tracked on January 25, 2006 10:51 AM

Great Blog!

Looks like the San Diego real estate market has done a 180 turn and is now on the verge of a multi-year decline!

For a great article on the true direction of the real estate market as

authored by a top San Diego real estate broker, visit:

Posted by: Epson Inkjet Cartridges at January 26, 2006 08:48 PM

you cannot predict a market cycle depending on the amount of time that has elapsed. You look at other indicators like current & historic affordability, job and population growth, number of building permits pulled, days on market & interest rate trends.

Posted by: Emptyspaces at February 5, 2006 06:52 PM

As a San Diego homeowner I can say things have really changed in the real estate market. Just a few short months ago most homes sold within a week or homes are sitting months and ones in my neighborhood have all had good size asking price reductions.

The air is really going out of the bubble, slow but steady.

This is least in San Diego.

Posted by: San Diego cosmetic surgery at February 10, 2006 02:19 AM

I do agree w/Chris...But, think the San Diego market has shorter cycles. Appx. 1990 marked prior top and than the average San Diego home lost 20% of it's value over the next five-six years.

Now the Summer of 2005 seems to be our most recent top and inventory has more than doubled, sales slowed and prices reduced in most ares of San Diego since than.

For my most recent take on the San Diego bubble, you can visit my blog at:

Posted by: San Diego real estate at March 12, 2006 06:40 PM

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