The business cycle is classified as the economic changes or fluctuations of trade, production, and other economic operations. The cycle comprises of four major phases. An expansion is the economical period when there is economic growth, employment rate increases and an increase of prices. The period, during which the economy is operating at the maximum output, inflationary price and above employment rate, is categorized as a peak phase. Depression phase occurs when the economy encounters a slow growth, contraction, decline in the employment rate and subsiding of the price pressure. The trough phase is the duration when the slowing ceases and the entire economic activities hit the bottom thus allowing emergence of the expansion and contraction phases (Pretti, 2013).
The real estate cycle comprises of the recession, recovery, expansion and oversupply phases. During the recession phase, there is a decline in the rent and prices thus decreasing the sales activities. The prices and market stabilize during the recovery phase. Expansion phase is characterized by the increase of the contraction level. It renders to less availability of space and drastic increase of prices. The contraction might lead the market share to be overbuilt. The market gets saturated. Hence, the prices decrease, and the sales volumes get slows and increases the available vacancies (Fuller, 2016).
According to the national bureau’s statistic business cycle is determined based at the time of the previous phase. The average period of the peak phase is after two years. The trough phase is between 4 to 5 years whereas the contraction phase might take an average of 5 to 7 years through to the next trough phase. The recent research conducted indicates that during 1854 to 2009, all the cycles took the duration of 33 cycles.
Rockin' The Suburbs: Home Values and Rents in Urban, Suburban and Rural Areas
Rapid Reaction: December New Home Sales
The real estate market is an investment platform of land and buildings properties. In addition, it comprises the natural resources. In a conceptual perspective, it is commercial, residential and industrial living properties. The real estate market is strongest in the industrial areas as compared to the other geographical location. Recent research outlines that most of the real estate investors have centered their operations on the commercial and industrialized location due to the availability of high population and large target market. Research shows that the real estate market is strongest at the west as compared to the east. Middle aged people are typical buyers of homes. The average age of home buyers includes 28 to 35 years (Gudell, 2016).
The prices for the real estate properties are determined by the general living standards of the buyers. The prices incorporate the location, the value of the properties and the target market. Factors affecting the economy determine the demand and supply for the real estate. The driving forces for the real estate market include the buyers’ level of income and the availability of the housing facilities.
The USA and the New Hampshire are the leading nations in term of real estate cycle. They are believed to have achieved high sales volume in the housing market. The investors of the real estate have integrated necessary measures that have lead to the realization of high real estate standards. In addition, they have been dominant over the market share due to the availability of necessary resources and adequate market study.
References
Fuller, C. (2016, January 28). Rockin' The Suburbs: Home Values and Rents in Urban, Suburban and Rural Areas - Zillow Research. Retrieved March 01, 2016, from http://www.zillow.com/research/urban-suburban-rural-values-rents-11714/
Gudell, S. (2016, February 23). January Market Report: Low Inventory Limiting Options For Buyers Nationwide - Zillow Research. Retrieved February 01, 2016, from http://www.zillow.com/research/low-inventory-jan-2016-11796/
Gudell, S. (2016, January 27). Rapid Reaction: December New Home Sales - Zillow Research. Retrieved March 01, 2016, from http://www.zillow.com/research/reaction-december-new-home-sales-11690/
Pretti, B. C. (2013, October 11). US Housing Recovery: It's Different This Time (No, Really). Retrieved March 01, 2016, from http://www.financialsense.com/contributors/brian-pretti/u-s-housing-recovery-it-is-different-this-time-no-really
