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Market Cycles and Income-Producing Real Estate

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A little study from Net Gain Real Estate looks at broader economic cycles as a guide for investors looking at commercial property.

An investor needs three pieces of information for developing a reasonable investment strategy and the chart provides this information: (1) The average length of time from peak-to-peak for the prior twenty-one cycles is 58 months. (2) The current business peak was reached in March 2001. (3) We are presently 68 months into the current cycle. What have we concluded so far?

* Given the country's current economic model, the economy is cyclical.

* Bull markets don't last forever.

* Recessions don't last forever.

* The average cycle for the past 100 years from peak-to-peak is 58 months.

* The peak for the current cycle was March 2001.

* We are 68 months into the current cycle.

This information gives an investor the next possible peak and the length of time needed for the subsequent peak. The average is 58 months. The shortest peak-to-peak business cycle is 17 months and the longest is 128 months. Given those conclusions, the real estate investor has to follow a sound investment strategy which includes techniques that insure staying power.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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