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  • w999surf w999surf Aug 30, 2012 2:32 AM Flag

    My memories of the real estate cycle

    There is no double dip, we have never came out of the first one. We have been in a down cycle in real estate for the last 5 years without an up cycle. It is not normal to have a down cycle that last this long which will lead to an up cycle that will last 2 to 1 or 10 years. Real estate is just starting to turn now and the economy will turn as we can not have a recovery without a recovery in housing.

    And if you look at the business cycles you do find a recession or a slow down every 10 years, but the duration of the recession is less than 2 years and the expansion last 8 years. And if you pull up the historic time line, you will notice that the increases in the expansion years started after we went off the gold standard. The reason for this is that technology advances has greatly increase productivity. With the increased productivity, cost of goods and services will fall. In order to maintain stable and slightly increasing prices, you need to increase the money supply to keep wages in line and encourage future investments.

    Housing is coming off the bottom and I feel the wrong move is to short the builders as I see continued profits and other markets returning to a normal appreciation.

 
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