Introduction to the cycle of American housing market

People who go to the United States to buy a house should be aware of this concept, which is about the cycle of the housing market. What is this? Looking down at the article must be a concern of many people who go abroad. Let's take a look at the introduction of the US housing market cycle. Welcome to reading.

Introduction to the cycle of American housing market

Homer Huo Yite, an American, wrote a hundred-year history of real estate cycle 1830 ~ 1933. He made a fortune by investing in real estate. He pointed out that most investors and speculators are usually good at investing in raw materials, real estate or stocks, and those who dare to go into the market to pick up bargains in times of crisis can earn the most profits; And real estate experts usually can't earn these excess profits, because they may have been deeply involved as early as the decline stage; Therefore, even if the house price falls to a very low level, they have no funds to continue buying.

But in other industries, people with a lot of money have the ability to actively undertake land and real estate when opportunities come. He found that during this 100 year, the best local real estate transactions in Chicago were created by john jacob astor, a fur trader, marshall field, a wholesale and retail trader, and Porter Palmer, who was engaged in trade and hotel industry. They are not real estate experts, but when the real estate crisis bottomed out, they had a lot of money.

On May 1800 and 10, the US federal government began to sell its newly acquired real estate at a low price. From then until World War II, the American real estate market showed the characteristics of 18 cycle. By studying these histories, we can find shocking economic behavior and banking behavior.

The real estate cycle is (1) 18 18.

From 65438 to 0820, the United States experienced a significant economic recession. The recession began with the decline of land price, followed by the collapse of American cotton price in June 18 19. When prices rose, banks created and released a lot of credit. When the land market collapsed, most American banks went bankrupt.

(2) Real estate cycle 1836

Entering 1830S, the recovery of business triggered a new round of land speculation. These speculations rely on the loose credit conditions set by the government for financing. 1832 was only $59 million, but by 1836, it had soared to14 billion-a sharp increase of 137% in just four years. A lot of liquidity is created by newly opened banks, but the capital reserves of these banks are pitiful, and some even do not exist at all.

Most of this money has gone into the real estate industry for speculation. President andrew jackson didn't like paper money then. In his view, paper money is untrue, which has caused speculation and various distortions. 1836, Jackson signed a coin circulation order, requiring buyers of public land to pay in gold or silver in an attempt to restore economic order. This law effectively eliminated the credit problem and ended the fanatical land speculation. Real estate has entered a strange circle of forced selling, a large number of banks have gone bankrupt and the stock market has collapsed. The famous American economic panic occurred in 1837.

(3) Real estate cycle 1854.

After several economic downturns from 1837 to 1842, politicians agreed that a depression like 1837 should never happen again. Banks can only lend according to the level of gold and silver they reserve. This principle should always be maintained. 1848, California discovered a huge gold mine-San Francisco. Since 1848, the gold supply in the United States has been increasing for nine consecutive years, and California alone has produced 500 million dollars of gold.

At the same time, the discovery of gold in California also led to the largest immigration in history at that time. With the large increase of gold supply, banks began to expand credit on a large scale (many important industries, mines, transportation and machinery in the United States were established in this golden age), and banks also began to lend to those enthusiastic gold and land speculators. 1857 On August 24th, new york Ohio Life Insurance Trust Company suddenly went bankrupt, causing market panic. Thirty days later, the Pennsylvania Bank in Philadelphia also closed. There is a long line at the door of every bank in this city, and depositors try to get their money back. On June+10, 5438, there was a national panic, and it didn't end until June, 5438, when the American Civil War began.

(4) Real estate cycle 1869.

1864 After the American Civil War, 19 after the 1960s, with the development of the second industrial revolution, countries gradually stepped out of the gloom of economic downturn and boarded the train of rapid economic development. The vast United States continues to focus on railways to develop its economy, and laying new lines has brought infinite attractive profit prospects to Americans and even investors around the world.

In order to encourage capital-intensive railway investment, the federal government encourages railway investment through various forms, such as making full use of financial instruments to borrow funds, giving policy support, and giving land free of charge. The federal land granted to railway companies is very large, with Minnesota and Washington State accounting for 1/4, Wisconsin, Iowa, Kansas, North Dakota and Montana accounting for 1/5, Nebraska accounting for 1/7, California accounting for 1/8 and Louisiana accounting for/kloc-0. Huge land investment has solved the capital problem for railway companies. According to the aid policy of the federal government, the land granted by the railway company can be disposed of by itself. In order to turn these lands into capital, railway companies generally adopt two ways: one is to sell them directly to immigrants at high prices; The second is to organize urban development companies to speculate on urban land. Land speculation reached its climax at 1869.

On 1873, President Grant of the United States approved the Coinage Law, which changed from the original gold-silver standard to the gold standard. As a result, the price of silver plummeted, leading to a rapid tightening of the money supply. At the same time, in May 1873, 1, a panic occurred in an unexpected place (Austria). Austrian banks are mired in the quagmire of railway stocks, and the economic crisis and fear of crisis have spread to Germany, Belgium, Italy, Switzerland and the Netherlands. Finally,1September 8, 873, Wall Street failed to resist the economic crisis spreading like a plague. On this day, new york warehouse and securities company defaulted one after another. The bad news is yet to come. On September 19, the investment bank building of Jakuk Company was declared closed in stormy weather.

(5) Real estate cycle 1888.

After 1886, railway construction rose again. From 1885 to 1892, the number of railway lines built in the world reached190,000 kilometers, nearly double the last climax. Among them, the United States built 75,000 kilometers of railways, half as much as the last high tide. During this period, the electrical revolution began, and electric lights, telephones, trams, motors and so on came out continuously, forming one new industry after another. During this period, electric lights, telephones, trams, motors and so on came out continuously, forming one new industry after another. Driven by the railway construction and electrical revolution, American industry developed rapidly, and a large number of immigrants entered the country, opening up new land. Land speculation is crazy, reaching its peak at 1888. From 65438 to 0890, the financial crisis occurred in the United States. 189 1 The production of heavy industry and light industry declined in the first half of the year, but improved rapidly in the second half. 1893 is in crisis again. As far as real estate is concerned, the most famous is the bursting of the Florida real estate bubble in 1887.

From June 1893 to August 65438, the average market price of industrial stocks fell by nearly half. In one year, more than 600 banks and credit institutions went bankrupt, and more than 15000 went bankrupt. The depression lasted until June 1895.

(6) Real estate cycle 1908

During the period of 1907- 1908, in the United States, a large number of individual enterprises were transformed into joint-stock companies during this period, and water-mixed stocks were issued, from which they made rich profits. Such a high price is difficult to be accepted by limited demand, so the time is ripe for the bubble to burst.

From 1907 to 1908, more than 300 credit institutions in the United States went bankrupt, with debts reaching $356 million, while most banks stopped paying cash. More than 30 railway companies closed down. They owned 665,438+billion US dollars in stocks and bonds, and the railway length was 1.3 million kilometers. There are also 27,400 industrial and commercial enterprises registered as bankrupt, with debts reaching 420 million US dollars.

(7) Real estate cycle 1929.

As we all know, the stock market plunged at 1929. The cause of the crisis is the lack of money supply caused by the inaction of the Federal Reserve. On the other hand, we are worried that the collapse of the real estate market may also be the direct cause. The continuous sharp drop in real estate prices has caused its market value to be seriously lower than the amount of bank loans it guarantees. The lower the house price and farmland price fall, the more bankruptcies there will be in the banking system. The landmark events are the construction of Empire State Building in 1927 and the bursting of Florida real estate market bubble in 1926. The former is called "empty state building" in 193 1.