SUMMARY    HISTORY    PEAKS & TROUGHS    FORECASTS

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In order to most accurately determine prior market price cycles one must remove the effects of inflation and look at real historical prices. The past 30 years have seen three real price cycles and the beginning of a fourth in Milwaukee. As the market is now in a downturn a point to consider is the prior downturn cycle which involved marginal nominal price growth over a long period of years and falling real prices. Market cycle time periods have varied from a market downturn of 6 years to the prior market growth cycle of 21 years.

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The mortgage-debt-to-income ratio is commonly viewed as the most accurate method of determining market cycles. The past 30 years have seen three cycles and the beginning of a fourth, all of which included large changes in home affordability. The peak in 1981 is an abnormality due to all time high mortgage rates. It does however act as the turning point of a 22 year improvement in Milwaukee home affordability. Due to this abnormality of the late 1970s and early 1980s, the median affordability ratio is skewed. Consequently, despite the fact that home affordability is at the median, the current affordability ratio generates some concern.