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The Long Cycle of Real Estate

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Abstract

The experience of the 1985-93 boom/bust in real estate has left industry players nervous about when it might happen again. This paper examines the possible causes and the periodicity of such major real estate cycles. A search of the literature for return evidence from this century suggests that there was only one other period of negative total returns for national real estate - the late 1920s and early 1930s. The evidence suggests that both periods of negative returns were caused by excessive levels of new construction, induced by an unusual rise in NOI, which in turn was the result of an inflation spike in the general level of prices. Evidence from even earlier periods suggests a periodicity for such real estate boom/busts of some 50 to 60 years. Perhaps the caution of today's Federal Reserve Board about containing inflation means that we will not likely see another boom/bust period for real estate during the remainder of our careers.

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  • Ronald W. Kaiser, 1997. "The Long Cycle of Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 14(3), pages 233-258.
    • Handle: RePEc:jre:issued:v:14:n:3:1997:p:233-258
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    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol14n03/v14p233.pdf
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    Cited by:

    1. Gao Lu Zou & Kwong Wing Chau, 2015. "Determinants and Sustainability of House Prices: The Case of Shanghai, China," Sustainability, MDPI, vol. 7(4), pages 1-25, April.
    2. Gaetano Lisi, 2015. "Use of Hedonic Prices to Estimate Capitalization Rate," International Real Estate Review, Global Social Science Institute, vol. 18(3), pages 303-316.
    3. Robert Edelstein & Desmond Tsang, 2007. "Dynamic Residential Housing Cycles Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 35(3), pages 295-313, October.
    4. William Miles, 2009. "Housing Investment and the U.S. Economy: How Have the Relationships Changed?," Journal of Real Estate Research, American Real Estate Society, vol. 31(3), pages 329-350.
    5. Konstantin A. Kholodilin & Sebastian Kohl & Florian Müller, 2023. "Government-Made House Price Bubbles? Austerity, Homeownership, Rental, and Credit Liberalization Policies and the “Irrational Exuberance” on Housing Markets," Discussion Papers of DIW Berlin 2061, DIW Berlin, German Institute for Economic Research.
    6. Stephen A. Pyhrr & Stephen E. Roulac & Waldo L. Born, 1999. "Real Estate Cycles and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy," Journal of Real Estate Research, American Real Estate Society, vol. 18(1), pages 7-68.
    7. Devaney, Steven, 2010. "Trends in office rents in the City of London: 1867-1959," Explorations in Economic History, Elsevier, vol. 47(2), pages 198-212, April.
    8. William C. Wheaton & Mark S. Baranski & Cesarina A. Templeton, 2009. "100 Years of Commercial Real Estate Prices in Manhattan," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(1), pages 69-83, March.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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