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 thirty years have seen four real price cycles and the beginning of a fifth in Visalia-Porterville. Including one cycle of eight years in which nominal growth a mere 2.4%, yet real declined by 17.5%. Market cycle time periods have varied from a market downturn of five years to the prior market growth cycle of six 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 thirty 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 nearly 22 year improvement in Visalia-Porterville 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 only marginally above the median, the current affordability ratio generates concern as it has reached a volatile level.