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October 2, 2018

Real Estate Market Shifting

There is some chatter these days about the real estate market "shifting." From a minor increase in what is very low inventory levels, to "the sky is falling."

Is The Sky Falling?

Keep in mind that real estate and the economy are cyclical. Expansion, prosperity, recession, depression are the phases of the business cycle.

The government started to track business cycles in the 1850s and there have been something like 30 turns in the business cycle since.

I have personally experienced as a real estate broker and investor in California, the 1979 crash (when interest rates on First TD/Mtge Loans to buy an owner-occupied dwelling with 20% down exceeded 18%). I then experienced the 1990 crash (pictured on this Newsweek cover, Oct 1, 1990), and by then, I had diversified my businesses, and the last, the mid-2000s.

It is part of being "in real estate." Interest rates will need to go up at some point as they have been abnormally low for years. Fed policy to get capital invested after the last big crash will require it. It is always something, and the best thing you can own through the ups and the downs, is real estate, especially if your investment philosophy (and those of your clients) is buy and hold.

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