Friday, May 14, 2010

The SEVEN year ITCH....

Speak to old time Realtors and investors in this town and they will tell you about the seven year cycle.

Now it is not an exact science like aeronautical engineering, but it does seem rather interesting that RE tends to top and bottom in 7 or so year cycles.

It would be even more noticeable if the price chart was adjusted for inflation, since a flat year would in fact be a price drop. However even on a regular chart it is pretty obvious.

Take a look above. Our first top is 1980-1981. The bottom came around 1987-8. The next top came in 1994-5. We then had a perfect drop to 2001-2. Finally we had a peak in 2008 exactly where you would expect it and then....??!!??

Has the seven year formula failed us? Has it just been delayed by zero rates?

I am moving more towards a 5 wave structure. The third waves are the most violent up-moves.
We have that from 2001-2008. Then we get a 4th wave drop and finally the last 5 wave to top the pattern. No-body knows where and when fifth waves top.

Like I said before, the stage is set for the start of the drop this year. We have listed the reasons a million times, the same crazy number that the average detached house sells for in this crazy town.