"It's no secret that the United States housing market is cyclical and in the midst of yet another painful correction. The causes and characteristics of these cycles vary, at least in some respects, but the implications for home buyers, home sellers and homeowners remain remarkably reliable as the cycles roll by."
"Housing cycles aren't all alike, yet over long periods of time a basic pattern can be discerned", says Mark Dotzour, chief economist of the Real Estate Center at Texas A&M University.
"A cycle doesn't really have a start or a stop, but to pick a point at random, we might say that a housing cycle "starts" when economic activity heats up and interest rates rise. Higher interest rates make housing less affordable, so demand decreases and home prices fall. "
"Then, as economic activity slows and interest rates decline, housing again becomes more affordable and, consequently, demand and prices go up. Then the cycle repeats. Housing tends to lead the economy and thus can be an indicator of future economic activity."
Read the full article: What Drives Housing Cycles? by Marcie Geffner of BankRate.com
Recent Comments