The timing of the land cycle has some esoteric influences behind it.
It’s these influences, in my opinion, that go some way to explaining why it is 18-years in length.
That’s not to say that there is no other explanation.
Fred Harrison – who I interviewed last week – theorises that the length of the land cycle, is 18 years due to the long-term rate of interest.
In his book Boom Bust: House Prices, Banking and the Depression of 2010, published in 2005, Fred shows historically the return on mortgages tends to average around 5% over time.
This rate results in a payback period of around 14 years - meaning that, on average, it takes about 14 years for a typical mortgage to be paid off or for the investment to reach its return.
When people stop taking out mortgages because home prices have reached their limit based on their incomes, the market collapses.
Combine this with the government’s failure to collect the land rent (un-earned gains) via a land tax, and the inevitable result is an unsustainable increase in land price inflation that must terminate.
And terminate it does, after approximately 14- years of rising land values leading to, on average, 4-years of declining values.
Although the 18-year cycle’s relation to real estate can be traced back to the work of Homer Hoyt and Roy Wenzlick in the early 1930s - knowledge of an 18-year cyclical pattern, and its relation to stock market booms and busts goes back much further than this.
It’s the traders that identified it, and their research, that gives us a starting pattern for analysis.
I mentioned in the last LCI LIVE ZOOM session, that I would go into some explanation regarding their analysis if demand was there – and quite a few of you have reached out.
The plan for this series is to elaborate to enable me to delve into the research further – especially in regard to narrowing down timing for the peak.
In this report, I elucidate some of the research in relation to W.D Gann.
I’ll follow in later reports, with other historical and modern day traders, who have referenced an18 year cycle cycle in their cyclical analysis, also.
(I have shared some information re the esoteric cycles in previous years – however, there is still confusion amid some subscribers as to how it relates to the land cycle – hopefully this report will shine a light.)
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