Financial Issues How To Leverage the Boom-Bust Real Estate Cycle

Any manager or trustee who has been around for at least three years has noticed the recent sharp turn in the real estate marketplace—from red hot in 2005 to ice cold in 2008. How could that have happened? What are the politicians saying about this bust and what are their solutions?

While the various cures for the downturn are important and worthy of study, what is more important to your personal economic security is learning how to discern where we are in the boom-bust cycle, and understanding how to predict (with some accuracy) future transitions from boom to bust.

This article, therefore, is focused on leveraging the endless boom-bust cyclefound in the real estate market.

A Short Trip Down Memory Lane

A few years ago, we were reading about the endless real estate boom with infinite opportunities to buy an even larger home, with little or no money down. We were reading articles about demographic trends, as well as a never-endingstream of immigrants, legal and illegal, pouring into this country, adding new demand for housing.

We couldn’t turn on the TV without seeing shows about “flipping homes,” often done by first-time investor owners. And yes we have heard the two biggies: 75% of all Americans who become millionaires made their money in real estate; and “They ain’t making more land,” so as we have more people, prices must go up.


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