Real Estate Market Cycles 101
April 7, 2009In the April 2009 edition of Realtor Magazine, there was a particularly interesting article about real estate market cycles. It addressed issues such as inventory levels, appreciation, and stages of a market cycle. Some of the bullet points include:
- Appreciation was out of whack from 2000-2006, a time in which values went up on average 89%.
- The market is in balance when there is 5-6 months of inventory available.
- The stages of a market cycle resemble Elisabeth Kubler-Ross’s states of death and dying. Optimism, Excitement, Euphoria, Denial, Fear, Panic, Despondency, Depression, Hope and back to Optimism.
We scanned the most interesting box, which details these bullets.
Market Cycle Info (click to enlarge)
We’re big believers in keeping close tabs on inventory levels in individual neighborhoods. We have put together a spreadsheet that contains all of San Francisco’s neighborhoods, how many properties have sold during Q1 2009, how many are for sale, and how many months of inventory there are in each. From these figures we are able to determine which neighborhoods are:
- Strong sellers’ markets
- Sellers’ markets
- In balance
- Buyers’ markets
- Strong buyers’ markets.
You may be surprised at the results from Q1 ’09. Because the spreadsheet is too large to post here on the blog, you may contact us if you’d like a copy for yourself. We continuously update this spreadsheet throughout the year so we can track the individual neighborhoods.
And why do we do all this? We’re big believers in the notion that there are a myriad of opportunities no matter the market’s condition. The key is understanding where they are. And it’s info like this that paints a picture of where the opportunities lie.
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Interesting. Read aninteresting article lately on commercial real estate in Manhattan over 100 years – kept pace with inflation. That’s about it.
Great stuff. Nice to read some well written posts that have some relevancy !
Thank you. Our belief is that if you know the truths of the market, then you can plan & act accordingly. Cheers.