World Cycles Institute

The Eighteen Year Real Estate Cycle

The Eighteen Year Real Estate Cycle

dream-homewebPeople fall in love with having a “dream home,” and cost is usually secondary. They get into debt up to the eyeballs.

Really bad idea, particularly right now. That’s because we’re at the very top of the market. In fact, it’s a bubble … certainly in Canada (and Australia is close behind). The US had their housing bubble a few years ago … but the full extent of the downturn is still to be seen.

Update: October, 2018

I originally posted this article in August of 2015. The low of the cycle, as mentioned in the article was the year 2000, so I’ve been expecting at top in the year 2018, which appears to be happening.

Here are some recent figures:

  • Denver: Aug to Sept 2018 sales are down over 30%
  • Manhattan (Bloomberg): the number of home sales have declined for the 4th straight quarter
  • Hong Kong: prices dropped in the past month for the first time in 29 months
  • Vancouver: prices are down 43% from a year ago
  • Toronto: detached home prices have plummeted over 30% year over year
  • London, UK: prices have dropped quite suddenly in September, the number of home sales has dropped to a decade low
  • Sydney: Prices are down over 7% through August of this year

Mall vacancies are at a seven year high. There’s even a mall in Calgary, Alberta, Canada, (my city) recently cited in zerohedge that has been built but is almost completely empty.

One of the key identifiers of an impending bubble bursting is extreme building, both residentially and commercially, but particularly commercially. Past market tops have been rife with completely empty commercial buildings.


Continuation of the original article:

We’re in a Worldwide Real Estate Bubble

Central banks have lowered interest rates to almost nothing in order to spur more borrowing. However, it results in more people buying homes they can’t really afford, and artificially drives up the price of those homes.

canada housing bubbleHere’s a visual from an article I clipped from in March of this year about the Most Overvalued housing market in the world … by the Economist, a well-respected international financial magazine. You’ll find the full article here.

The other, possibly even bigger problem for Canada is that the International Monetary Fund (IMF) a month earlier than this article came out, sounded the alarm that Canada’s household debt is well above that of other countries. Canada (where I live) has the perfect storm just waiting to happen, and it won’t be long before it does.

But. guess who thinks it isn’t a problem? Stephen Harper, the Canadian Prime Minister, and the Bank of Canada (Canada’s central bank) both tried to quell fears that anything is amiss. Of course, they’re both heavily biased.

millennails articleFunny enough, I noticed another article a few days ago on the site Marketwatch, about Millennials (25 to 34 year olds, in this case in the US) and the concern that they’re NOT buying homes. You’ll find the complete article here. I say, “Good for them!”

People just don’t get it. But Millennials do!

Buying a home right now would be really foolish. It’s the top of the market. You’ll be underwater financially in no time.

There’s a little more to it than that, actually. There’s an even larger, longer cycle in play right now … the 172 year cycle. (you can see my video on it here) It’s bottoming. What this means it that the usual 18.5 year real estate cycle is going to go a lot deeper than normal. Longer cycles are more powerful than shorter ones.

The 18.5 Year Real Estate Cycle

Edward R. Dewey spent an entire chapter on it in his book, “Cycles, the Science of Prediction.”

realestatechart5Above is a chart showing the pattern from 1795 through today. You can see how regular it is. It averages about 18 and a half years. If you’re smart, you buy a home at the bottom and sell (or keep it) at the top.

We had a major low in around the year 2000 in both the US and Canada. The US had a top around 2007 associated with the subprime crash. If you were to look at the appropriate chart (the real estate sector) in the US stock market, you’d see it peaking about now. It’s had a second top within the 18 year cycle. I would expect both the US and Canadian cycles to head down now and bottom in about 3 years.

Canadian Real Estate Market REV3
Here’s a chart of  Canada’s real estate market over the past 18 years. It’s peaking right now and I would expect another low around the year 2018 … not very far away. The challenge with identifying the Canadian cycle is that they only started recording data about 20 years ago.

This 18.5 year real estate cycle is also a rainfall cycle. It’s called the 9.3 year rainfall cycle. Dr. Raymond H. Wheeler, the Father of Climate Cycles, found that it’s wet on the upside (wet leads to prosperous times) and dry on the downside (we’re in a drought right now … it’s getting cooler and dryer worldwide, which leads to depression). Droughts always lead to depression. They always have … throughout history.rranom-vic-0112-19917

Above is a rainfall cycle for Victoria, Australia, which shows the 18.6 year rainfall cycle in action (Source: TallBloke’s Talkshop)

Don’t get fooled by interest rates. As I mentioned earlier, central banks (like the Federal Reserve in the U.S., the European Central Bank, and the Bank of Canada) have instigated the lowest rates in history to try to spur the economy, but they’ve been unable to do it.

DOW-topping-webI’m expecting a very big crash very soon. The US stock market has already topped. Oil has tanked, but it’s got further to go. And interest rates are going up … quite a bit. Can you afford a big jump in interest rates? Well, I’d do the math before signing on the bottom line!

So … if you’re thinking about buying a home … think long and hard. Personally, I’d wait a few years until this bubble crashes and get in at the bottom. Some of us are projecting homes to be worth under 25% of what they are now in just five years – that’s not long to wait to get your dream home.

Edward Dewey, the Father of Cycles said:

“The building cycle is so long that most people don’t experience two cycles in their business life. For many individuals, an unfavourable first experience means a life-time tragedy.”

Pay careful attention to the real estate market, the stock market, and the economy. The central banks have created an extreme bubble and bubbles always burst. The signs are becoming more and more ominous. We’re likely only months away from a really large contraction.

Don’t let anyone tell you this time is different.


Similar articles by category: climate, financial, money
{ 22 comments… add one }
  • Nicola Timpa August 14, 2015, 4:55 am


  • Joel Lovingfoss August 14, 2015, 12:35 pm

    Very insightful presentation Peter… I will put Dewey’s book, Cycles: The Science of Prediction, at the top of my list. Thanks!

  • Kent August 25, 2015, 1:01 pm

    For some reason, I still remember that real estate chart in Cycles when I read it in the 70’s. But Phillip J. Anderson says the 18 year cycle has already bottomed, and it is clear sailing until 2024. Any thoughts on this.

    • peter August 25, 2015, 1:43 pm

      Hi Kent,
      I can’t comment on someone’s else’s cycles analysis.

      I can tell you that the Canadian and Australian markets are leading the bubble (currently right at the top), and with commodities having sunk to new lows and the most of the world markets starting to head down, I haven’t seen a bottom anywhere. Now, some might say the US had a bottom in 2008/9 but I attribute that to the subprime crisis and with the depression picking up steam, I expect everything to be in a trough by 2020 or so. The US market has a lot further down to go. This is going to be a big, long trough, so 2024 would certainly fit well within it. The US and Canada have been in a technical recession for months, and so everything is pointing down, as well as quite a number of cycles, not only the real estate cycle.

      Don’t know that I’ve answered your question …

  • Joe October 19, 2015, 1:25 am

    Hi Peter
    your Canadian ?
    both my parents came to the US from Canada and I still have cousins up there . I’m a yank though having grown up in Seattle and spent the summers sailing in the san Juan islands , great place . I live in southern Oregon now but visit family and friends each year in Seattle and from what I’ve seen the construction boom has gone crazy in downtown Seattle as well as Bellevue along with the smaller cities . it certainly has a topping feel to it .I’m curious though In regards to Canada real estate , didn’t they impose a transaction tax back in 2009-2010 on real estate ?
    I have no idea how that effected the market or if it really effected anything ? also do you think the GST is a good thing ? would you think it would be benificial to have a similar tax in the USA now that you have seen it and lived with it ?

    • peter October 19, 2015, 6:51 am

      Canadian, yup. I lived in NY though during my teenage years, where I learned to sail. I used to own a CC35 and spent years in the San Juans tooling around. I know the area backwards.

      No, no transaction tax. Canada has the largest bubble in the world, more because of free money than anything else. GST is a consumer tax, so it’s better for lower incomes people. It’s all we have here in Alberta – no provincial tax (all the other provinces have a 5-10% tax on top of the 5% GST).

  • Patrick May 18, 2016, 9:22 am

    Thank you for that very informative post on the real estate cycle I just came upon it are you still calling for a downturn into about 2020?…thanks again & best regards

    • Peter Temple May 18, 2016, 9:33 am

      Hi Patrick,
      I believe the downturn is imminent – this year. The bottom around 2020/21.

  • Kevin August 11, 2016, 3:28 pm

    The Canadian housing bubble is still growing as foreign money is still coming in Ontario and BC except Vancouver for now. And Feb and other central banks keep pumping money to maintain the stock markets at all time high to get Hillary Clinton elected. Do you still believe the Canadian housing bubble will burst any time soon without any further government intervention? Thanks.

    • Peter Temple August 11, 2016, 3:36 pm

      Hi Kevin,
      Well, I don’t believe the connection between banks and Clinton, as International Bank of Settlements (the ones behind all this mess) aren’t creating more debt worldwide in the name of Clinton. Quite frankly, they’re done and the market knows it. Look for a top in the US by October. Every other market worldwide looks to be ahead of the US in that regard (and Canada just follows along).

      Credit is starting to dry up. It won’t be long at all before the banks start getting worried about mortgages – it’s already happening here in Western Canada. Banks are starting to pull in loans. I know that personally from acquaintances who are going through the exercise.

      I wouldn’t expect the real estate market to last beyond October, either.

  • Kevin August 15, 2016, 1:59 pm

    Hi Peter,

    Thank you for your reply. I know it sounds like a conspiracy, but it’s true that bankers from Wall Street want Clinton, not Trump, to get elected. And plus Fed and their Plunge Protection Team don’t want Trump either. Other central banks don’t want see another black swan event like Brexit. So they will do whatever they can to pump more liquidity into the market just like what Bank of England did i.e. to cut the interest rate to release more credit to the market.

    I know it’s very easy to get mortgages (e.g. 2 year fixed is at 2.08%) from the big Five in Toronto right now. And Bank of Canada still has some room to release more credit into the market since Canadian economy is lagging showed from last report. What’s your thought on this? Thanks.

  • Josie July 23, 2017, 9:51 am

    But the stock market did not tank in 2015. This prediction was WRONG! If I had listened to it, I would have lost money because the S&P went up since 2008 to now (2017).

  • Mike Rowe February 11, 2018, 10:04 am

    Glad I missed this report when it came out!!! I would not have NOT bought and I would have no hope of getting into the the housing market now since prices have increased sooooo much. 2018 in Vancouver. There’s way too much misinformation out there !

  • mick May 12, 2018, 12:46 am

    Any update to this please . Real estate markets seem to be doing just fine in 2018, in North America + Australia

    • Peter Temple May 18, 2018, 4:08 pm

      Real Estate bubbles are doing just fine, yes, but this is the year they will crash. The cracks are already starting to show in Toronto, Vancouver, New York, London, San Francisco, and down under. I’m getting around to updates, but the first level of business is a new webinar, “Navigating the Crash 2” will be announced this coming week.

  • Niels October 9, 2018, 4:40 am
    • Peter Temple October 9, 2018, 7:10 am

      It’s not even debatable at this point, so I won’t.

  • Joe Longwill October 10, 2018, 12:56 am

    i think you have a typo
    quote from above , i think you meant year 2018
    so I’ve been expecting at top in the year 2081, which appears is what is happening.

  • Michael R Douville October 31, 2018, 9:29 pm

    Good article on Cycles. It is very difficult to pinpoint the bottom and top of Multi regional assets. Robert Shiller did a pretty good job with his Case-Shiller Housing Index readily available at FRED. I believe if you look at the work, the bottom of the last cycle was 2010-2011. The 2000 time frame was tough of the Dot.coms, but US Real Estate hardly felt a tremor. The big Downdraft was the S&L Crisis and the resultant RTC liquidation through 1992/3. The Cycle repeats 18 years later with the completion of the cycle and the start of another in late 2010 to early 2011. Further, typically, there is a jeopardy time frame 7-9 years from bottom which coincides perfectly with the current Housing Downturn. Welcome to the correction.

    • Peter Temple November 1, 2018, 12:02 am

      i will stand by the ten years of extensive work I’ve done on this, the work of Dewey, Puetz, Wheeler, and Anderson, and the lunar nodal cycles, which it’s based on, of course, that hasn’t changed throughout the history of the planetary cycle.

  • Michael R Douville November 1, 2018, 9:21 am

    Oh, I believe the 18 year cycle is correct. Your cycle end dates for Canada may be different than the US. When the US Housing bubble broke, Calgary and Edmonton had very little effect and prices continued to rise. In fact, the twin Oil Office buildings in downtown Calgary were constructed in that time frame, occupied and then the oil dropped causing the oil companies to go bust and millions of square feet of office was vacant. Those building are so expensive to maintain, the current owners are actually entertaining demolishing them! That is typical of late stage activity. FRED or the Federal Reserve Electronic Data is readily accessed by the public and the US Housing’ completion of the prior cycle and the beginning of this one is very clearly demarked. The Globe does not necessarily have the same timing model, but does seem to have the same cycle! You obviously have done your homework. Real Estate is much more “Regional” as Calgary has shown. Calgary enjoyed the huge oil boom and then bust which exaggerated the cycle effects. As you know, the ending of the cycle is really a process. Again, if you look at the FRED data, the US bottomed in the 2010 to 2011, (even to 2012) timeframe and started the current cycle. In the US, there is a correction typically 7-9 years from bottom. Existing home sales have dropped for 7 months in a row across the US.; welcome to the correction! However, in the US, it will be a correction in an ongoing Bull Market due to top in the 2023/24 time frame also known as the “Explosive Phase” . Very good work, Canadian and US cycles appear not to coincide. This “correction” which is coinciding with a Stock Market Bubble, a Bond market Bubble, a Liquidity Crunch, and the end of an Historic Credit Expansion will probably be vicious. Your advice to be cautious, that better pricing is available in a very short while, is ‘Spot On”. Those that are aware and prepared will earn incredible fortunes in the next 7 years!

Leave a Comment