What Phase of the Real Estate Cycle are we In?

[David Lamb]

Economists:

It is said that there are 4 phases of a real estate cycle: (1) RECESSION (supply greatly exceeds demand and high vacancy rate); (2) RECOVERY (rental growth remains stagnant with little signs of new construction but the economy feels like it is headed in right direction); (3) EXPANSION (job growth is strong and increased demand for housing.  Public has confidence in economy) and (4) OVER SUPPLY (Due to expansion, supply is now starting to exceed demand.  We are at tipping point to return to recession.).

Seems to me (at least in California) like the past 10 years have been in EXPANSION but inventory remains low.  

Do you agree on where we are today and do you have any crystal ball predictions on when we will move to the next phase?

Thanks,

Dave

[JD Martin]

It's different everywhere. Overall, there is probably enough housing in the US for everyone but no one wants to live in Northeast Iowa or Central Mississippi so there's a mismatch between available housing and where people want to live. Where I lived in Western Ohio the housing market has been in Recession or Recovery for 30 years with no end in sight. Places in California have barely known anything but expansion. So there's no blanket prediction for the US as a whole except that if rates stay higher long enough to work through all of the 2.5 mortgages, housing may come down somewhat because it's virtually frozen right now.