House Market cycles?

Question

I'm selling a home in WI and right now it is a buyer's market. Is there an average cycle length? I want to get in the right mindset if this thing is going to take some time.

Answer 1

Housing market ties directly and indirectly to the economy and it lags behind all the economic indicators. When I was younger, that cycle ran about 4 to 5 years. However, the Fed is better with fiscal and monetary policies now using interest rates to influence the economy. So the typical cycle stretches to 8, 9, 10 year cycles.

Looking at the current inventory level, I think it is going to take at least a couple of years. However, if the Feds decide to lower interest rates, that can revive the market. Key element is oil prices. Inflation will cost interest rate to go up and make houses less affordable.

Having said that, I like to introduce to you something call the lateral market concept. If your are the home owner and not a speculator, you should not have to worry too much about how the market is currently. If the market is low and you sell low, your new replacement home will also be low. It is actually worse if you are in a spectacular rising market because you will be selling high and buying high as well. However, your taxes and mortgage of your new purchase will go through the roof.

Answer 2

I don't know about length, but usally if the stock market (paper and intangibles) is up, commodities and the housing market (tangibles and real assets) will be down. Right now the stock market is WAY up. Why don't you just trade stocks and wait for the market to swing the other way! :-)

Answer 3

If you look at historical figures you will see that there is a ten year trend. If this is going to repeat itself you will have to wait around five more years until it bottoms out and it starts to climb back up. I am not saying that you will not be able to sell your house until five years, all I am saying is that sellers are going to have to be patient and willing to negotiate for the next five years.