By OBBM Network Editorial Staff

Derived from an episode of Epic Real Estate.

History shows that American home prices don’t wander aimlessly; they move in a rhythm that repeats every 18 years, and the next dip could be looming.

Origins of the 18‑Year Cycle

The concept traces back to 1933 economist Homer Hoyt, who examined a century of Chicago land records and discovered a predictable pattern of peaks and troughs. Modern analysts have adapted Hoyt’s work, adding two extra variables—price momentum and affordability—to create a three‑dial formula for forecasting market bottoms.

Matt Theriault explains that the first dial tracks the timing of the cycle, noting that the last peak occurred in June 2022. According to the model, the “four‑year down” phase should be underway, but an unprecedented factor appears to be delaying the expected decline.

Dial Two: Price Momentum vs. Reality

The second dial measures how quickly prices should fall to align with the long‑term trend line. The formula predicts a monthly drop of about $2,100, aiming for a median home price of $374,000. In reality, the median price rose to a record $440,600 in June, climbing roughly $440 per month over the past year.

As Theriault notes, “the fall Andy predicted, it’s real. It’s just running where his charts weren’t looking. Prices are falling in what they buy, not in how they read.” This divergence suggests that while nominal prices climb, real purchasing power continues to erode.

Dial Three: Affordability Pressures

The third dial looks at the classic rule that a home should cost about 3.5 times a family’s annual income. The 2009 bottom sat at 3.7 times income; today the ratio sits above five, indicating a significant affordability gap.

Theriault points out, “Your grocery receipts, insurance renewal, property tax bill… none of those went up 1%. The pile of dollars your house represents buys less than it did when the price was lower.” This highlights that even as sale prices set records, the real value to owners is declining.

Competing Forecasts: 2027 vs. 2030

Fred Harrison, the analyst behind the original formula, originally pegged the cycle’s peak at the end of 2026, implying the bottom could arrive closer to 2030. Theriault contrasts this with the earlier prediction of February 2027, noting that the market may already be at its low point.

He adds a personal perspective: “After 20 years in this business, I think the biggest factor is supply and demand. We’re under‑building, population is growing, and lending is tight. That combination makes a crash unlikely and points to a floor already in place.”

Implications for Homeowners and Buyers

Regardless of which timeline proves correct, the overarching lesson remains clear: timing the market is less important than time in the market. Homeowners who bought before 2022 have seen their equity rise, while prospective buyers should focus on long‑term affordability and the real purchasing power of their dollars.

Theriault concludes, “Historically, there’s never been a bad time to buy real estate. Prices are at an all‑time high. If you own a house, you’ve made money. Just a bad time to sell.” This underscores the enduring value of property ownership despite short‑term fluctuations.

In the coming months, observers will watch for signs of price stabilization and any shift in affordability metrics. The debate over the exact bottom date may continue, but the broader economic forces shaping supply, demand, and credit conditions will ultimately determine the market’s direction.

The full episode of Epic Real Estate is available on OBBM Network TV.