Understanding the 4 phases of the market cycle, it is important to understand the 3 drivers in the housing market which I shared on Thursday July 23rd 2009. Again, thanks to Alxe Perriello the President and Ceo of Realogy who recently impacted our lives. The 3 drivers are Inventory, Price and amount of Transactions or sides. Just like we experienced in 2003, 2004, and the first part of 2005, Inventory levels were low. Inventory levels normally control the market and are the foundational basis of the market. During a Peak market, low inventories will increase the prices. As prices keep increasing, eventually buyers will not keep on paying prices they cannot afford.
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