Which Market Cycle Are We Actually In?

If you've followed real estate for any length of time, you've probably heard people say we're heading for a crash.

Others insist prices will keep climbing.

Both sides usually point to a handful of statistics that support their view. The problem is that markets don't move based on headlines—they move through cycles.

Over the past several weeks in Deal Lab, I've been teaching what I believe is one of the most valuable concepts in real estate investing: understanding the four market cycles.

Not because they predict the future with perfect accuracy.

But because they help investors recognize what's happening before everyone else does.

The Four Cycles

1. Hypersupply

Too many homes. Too much inventory. Buyers gain negotiating power, price reductions become common, and investors have leverage.

2. Recession

Demand weakens. Lending tightens. Prices often soften. Weak operators disappear while disciplined investors quietly buy great assets.

3. Recovery

Inventory begins shrinking. Buyers slowly return. Confidence improves before the headlines catch up.

4. Expansion

Demand exceeds supply. Appreciation accelerates. Everyone feels like a genius...until they start overpaying.

Every major real estate market moves through these phases. The only question is where your market sits today.

Why This Cycle May Look Different

Every cycle has a catalyst.

The Great Financial Crisis was driven by housing and credit.

COVID reshaped migration, interest rates, and remote work.

Today's cycle may be influenced by artificial intelligence, changing employment patterns, elevated interest rates, affordability challenges, and shifting consumer confidence.

None of these factors guarantee a recession.

But they do change the math investors should be watching.

Watch the Data—Not the Headlines

Instead of asking whether the market will crash, ask better questions:

• Is inventory rising or falling?
• Are days on market increasing?
• Are sellers reducing prices?
• Is employment growing in this city?
• Are rents still supporting today's purchase prices?
• Is population moving in—or out?

Those answers tell you far more than social media predictions ever will.

What I'm Seeing on the Ground

One trend has become increasingly noticeable over the past several months.

Many of the large cash buyers who aggressively competed for properties just a couple of years ago have become far more selective. They're making lower offers, buying fewer houses, and demanding larger margins before they'll pull the trigger.

For wholesalers, that means more contracts are falling apart.

For sellers, it means fewer bidding wars.

For investors relying on the same exit strategies they've used for years, it can feel like the market has become much more difficult.

But changing markets don't eliminate opportunities.

They simply reward different strategies.

Where I Think We Are

Nationally, I believe we're moving away from the easy-money Expansion phase that defined much of the last decade.

Some markets are already showing characteristics of Hypersupply.

Others are beginning to resemble Recession.

Meanwhile, select markets tied to manufacturing, defense, logistics, and population growth continue to perform exceptionally well.

That's why I rarely talk about "the housing market."

There are hundreds of housing markets, and each one moves through the cycle differently.

The investors who understand their local market—not the national headlines—will have a significant advantage over the next several years.

My Advice

Don't invest based on fear.

Don't invest based on hype.

Invest based on where your market sits in the cycle.

The best investors aren't the ones who perfectly predict the future.

They're the ones who recognize changing conditions early, adapt their strategy, and stay disciplined while everyone else reacts emotionally.

Understanding the cycle won't eliminate risk.

But it will dramatically improve your odds of making smart decisions—regardless of what comes next.