Predicting the Future - What the Current Market Cycle Tells Us About What’s Next

1 November 2025

Let’s cut to the chase—everyone wants to know what’s around the corner in the real estate market. Whether you're a seasoned investor, a first-time homebuyer, or just someone with a casual interest in how housing prices are behaving, you're probably wondering: “Are we heading for a boom, a bust, or something in between?” The truth is, while crystal balls don’t exist, market cycles leave behind clues. And right now? The tea leaves are steeping.

Real estate has always moved in cycles. Like waves hitting the shore, the market goes through phases. And guess what? These phases aren’t random. They follow patterns. If we tune in closely, the current market cycle isn’t just chaotic noise—it’s a story. One that might just give us some insight into what’s coming next.

Understanding the Real Estate Market Cycle

Before we dive deep into where we’re headed, let’s rewind a bit.

The real estate cycle typically has four stages:

1. Recovery
2. Expansion
3. Hyper Supply
4. Recession

Sounds a bit like the plot of your favorite drama series, doesn’t it? Let’s break these down in plain English.

Recovery Phase: Picking Up the Pieces

After a housing recession, when prices have dropped and construction has slowed to a crawl, the market enters the recovery phase. Think of this as the quiet after the storm. Demand starts to stir, interest rates are often low, and savvy investors begin sniffing around for bargains.

Expansion Phase: Things Are Heating Up

Now we’re cookin’. The economy is improving, more people are working, and housing demand increases. Builders hop back in the game, and prices start climbing. It feels like a golden period—everyone’s happy, and optimism is at its peak.

Hyper Supply: Too Much of a Good Thing

Eventually, that fast-and-furious building catches up. There's more supply than demand. Vacancies rise, and prices plateau or even dip. Builders and investors get jumpy. Ever tried pouring soda into a glass too fast? Yeah, overflow.

Recession Phase: The Market Takes a Breather

This is when the brakes screech. Prices fall, oversupply persists, and buyers become scarce. There’s usually a shakeout—some investors lose their shirts, and only the strong survive. But don’t worry, it eventually circles back to recovery.

Where Are We Now in the Cycle?

This is the million-dollar question—and no, it’s not one-size-fits-all. Different markets are in different phases based on local economies, supply issues, and population shifts. But overall, here’s what’s going on:

- Interest rates have jumped—and that’s put the brakes on some buyers.
- Inventory is still low in many markets—especially entry-level homes.
- Prices are holding steady or softening slightly depending on location.
- Rentals are in high demand, but affordability is becoming an issue.

So, are we nearing the end of the expansion phase and flirting with hyper supply? Or are we inching toward a controlled slowdown—a softer landing before a new recovery begins?

It’s complicated. But let’s connect some dots.

Interest Rates: The Real Game Changer

You’ve probably heard it a hundred times already—interest rates are rising. But what does that really mean?

Look at it this way: higher interest rates are like a sudden downpour during your outdoor BBQ. It doesn’t end the party, but it definitely slows things down. When rates rise, monthly mortgage payments go up. That reduces what people can afford, which tamps down demand.

Now, here’s the kicker—today’s rates aren’t historically high. They just feel high because we’ve been spoiled over the past decade. Crazy-low rates became the norm, and now we’re adjusting.

So while demand is cooling off, we’re not seeing the floor fall out. This isn’t 2008. Lending standards are healthier, and there isn’t a glut of risky loans. That’s a critical difference.

Supply Shortages Continue to Shake Things Up

One of the biggest reasons the market hasn’t crashed? There’s just not enough housing.

And that issue isn’t going away anytime soon. Years of underbuilding combined with population growth have created a major squeeze. Especially in fast-growing cities, it’s become a case of “too many people, not enough homes.”

That’s kept prices relatively stable, even as sales volume has dipped. And with construction costs still high and labor shortages running rampant, the pace of new builds isn’t about to surge overnight.

So what does that tell us? We're probably not heading into a classic recession phase. Not yet, anyway.

Migration Patterns Are Rewriting the Playbook

Here’s something wild: people aren’t just moving across town—they’re moving across the country. The pandemic fast-tracked remote work, and now a lot of folks are chasing affordability and lifestyle over proximity to an office.

This shift has jolted once-sleepy markets into hyper-drive. Think Boise, Austin, and parts of Florida. But it’s also cooled once-hot metros like San Francisco and New York.

What this tells us is that the real estate cycle isn’t syncing up nationwide. Some areas are still booming. Others are correcting. It’s not black and white—it’s fifty shades of real estate gray.

What History Teaches Us

If we look back, real estate cycles last anywhere from 7 to 15 years. The last major downturn hit in 2008, and the recovery kicked into full gear around 2012. That means we’ve been in an upswing for over a decade.

Historically, long upswings are followed by corrections. But corrections don’t always mean crashes. Sometimes it's just a plateau, a sideways move, or a soft dip before stabilizing.

Remember: markets don't crash because prices get too high. They crash when there's a trigger—like a wave of foreclosures, a banking crisis, or an external shock. Right now, we don't have those ingredients. There’s turbulence, sure. But no clear signal of a freefall.

What Might Happen Next?

Now for the real meat and potatoes—what’s next?

Let’s weigh some possibilities based on our current position in the cycle.

1. A Long, Slow Softening

This is the most likely scenario. We may not see a crash, but rather a cooling. Think of it like a simmer after a boil. Prices might stagnate or drop slightly, but a floor will remain thanks to strong demand and limited supply.

2. Regional Divergence

Some markets will thrive while others correct. Places with job growth, affordability, and lifestyle perks will keep attracting buyers. Others may see out-migration and price adjustments.

3. Growth in Rentals

With affordability stretched, more people will turn to renting. This could mean big opportunities for landlords and build-to-rent investors. Multifamily properties, in particular, are gaining traction.

4. Innovation in Financing

As affordability challenges persist, expect more creative financing solutions. We're talking shared equity programs, rent-to-own models, and tech-driven lending platforms that streamline the buying experience.

How to Prepare No Matter What

The future may be uncertain, but that doesn’t mean you’re helpless. Whether you’re an investor, buyer, or seller, a smart strategy can help you ride any wave.

For Homebuyers:

- Lock in rates if you’re ready—further hikes could impact your borrowing power.
- Focus on long-term value—not short-term market swings.
- Consider emerging markets with room to grow.

For Investors:

- Diversify your portfolio by property type and geography.
- Keep cash reserves for unexpected expenses or opportunities.
- Be patient—timing the market is tricky, but smart positioning always pays off.

For Sellers:

- Price realistically based on comparable sales.
- Prep your property—good condition sells faster even in cooling markets.
- Be flexible with negotiations.

Wrapping It Up

Real estate is like reading the tides. You don’t need to predict every ripple—you just need to understand the current. The market we’re in right now isn’t collapsing; it’s recalibrating. And like all cycles, this one will eventually swing back toward growth.

If you keep your eyes open, stay informed, and make smart, intentional moves, there’s no reason to fear the future. In fact, there’s a lot to look forward to. Remember—fortunes are often made not during the boom, but in the moments of uncertainty, by those who see opportunity when others hesitate.

So lean in, stay curious, and keep asking questions. The market is talking. All you have to do is listen.