The 18 year real estate cycle that's been known to exist for over a 100 years and TO THIS DAY it trips everyone up. We never seem to learn.
Nobody paid attention during the 1990s when those familiar with the real estate cycle predicted the Depression of 2008 (including myself, in 1997). Almost all economists, financial analysts, journalists, pundits, bloggers, and armchair cynics will also scoff at this prediction of a severe recession and depression in 2026. They will say there is no way to accurately predict such an event so far in advance. But the cycle exists precisely because people don’t believe it.The legendary stock trader WD Gann used the 18.6 year average cycle in his famous financial table of 1901 and used it to time the market. That is how predictable it is.
There has been one fundamental cause of the boom and bust cycle: massive subsidies to land values. Since these subsidies are a governmental intervention into the market, the cause of the cycle is not “business,” hence the term "business cycle" is misleading. It is a cycle of economic distortions caused by government policies.
The monetary subsidy to real estate consists of cheap credit. In the US, the Federal Reserve manipulates interest rates by expanding the money supply. An injection of money increases the money reserves of the banks, which then lower their interest rates to loan out the extra money. Cheap credit fueled the real estate bubble that peaked in 2006, and super-low interest rates today are sowing the seeds of the next bubble. Similar money creation occurs by other central banks.
But over and over and over again, we fall for it.