Market Update | Real Estate Cycles

posted on March 24th, 2014 | filed under: Uncategorized

House Cycle 2Last month, one of the reasons we gave for low inventory was price gains were increasing home owners’ equity.

This month we’re going to talk about when that ends. Real estate is cyclical. The stages are:

  • Peak
  • Correction
  • Stabilization
  • Recovery

The cycles can run from 7 to 12 years. The last peak for San Diego County was in July 2006. The correction, or bottom, was in March 2009. The San Diego County market stabilized for the next three years, then recovered in 2013.

Since the recent peak of $469,950 in September 2013, prices have been stable in a narrow band between $450,000 and $455,000. We are now seven and a half years into the latest cycle.

We may break out of that band, or, we may not. The spring selling season will tell us a lot. Also, we’re talking about the county as a whole, in different cities, your mileage may vary.

The point is, if you have been planning to sell your home in the next five years, you may want to closely monitor the market this spring to see if you should accelerate your plans and take your gains off the table.

If you’re looking to buy, and plan on staying more than ten years, you’ll be fine.

Don’t be caught in the fool’s game of trying to time the market.

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posted by Jeff DeChamplain

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Jeff DeChamplain