Real Estate Cycles

by Fred Foldvary, Economist, San Josť State University

The real-estate cycle in the U.S. can be summarized with the following table:



 Peaks in   Interval    Peaks in     Interval     Depressions

land value (years) Construction (years) interval

1818 -- -- -- 1819 --

1836 18 1836 __ 1837 18

1854 18 1856 20 1857 20

1872 18 1871 15 1873 16

1890 18 1892 21 1893 20

1907 17 1909 17 1918 25

1925 18 1925 16 1929 11

1973 48 1972 47 1973 44

1979 6 1978 6 1980 7

1989 10 1986 8 1990 10

2006 17 2006 20 2008! 18

2024? 18 2024? 18 2026? 18

Real-estate values and construction have peaked one to two years before a depression, and have stayed at peak levels until the onset of the downturn.
The historical evidence is consistent with the theory that speculative booms in real-estate prices and construction act as an impetus for the downturn itself.

For an explanation, see my article:
"The Business Cycle: A Georgist-Austrian Synthesis." American Journal of Economics and Sociology 56 (4) (October 1997): 521-41.

An updated explanation (2007) is in my booklet,
The Depression of 2008, by the Gutenberg Press.