This is perhaps the most enlightening article that I have read so far. It does explain current dynamics in real estate market where prices are getting red hot because inventory is at historic low levels (because new constructions have slowed dramatically since 2008). Meanwhile population in the urban areas had been continue to grow putting pressure on rents and house prices. It's simple delayed feedback loop system that explains lot of things and data from past boom and current state fits pretty well with this theory.
The big question is how long this cycle will last. The 18 years mentioned in article seems too high. Currently construction activities are 1/3 of the size than boom period and I would estimate it catches up in 2-3 years. Then hyper supply period should start which should last again 2-3 years. So 4-6 seems like target for recession phase and 2-3 years before house prices starts becoming declining.
2015Q1 cycle report is here: http://info.dividendcapital.com/rs/dividendcapital/images/Cy.... They however seem to do only apartments instead of single family houses. According to the report apartments market should experience deacceleration on rent growth but higher than average rents nonetheless.
The big question is how long this cycle will last. The 18 years mentioned in article seems too high. Currently construction activities are 1/3 of the size than boom period and I would estimate it catches up in 2-3 years. Then hyper supply period should start which should last again 2-3 years. So 4-6 seems like target for recession phase and 2-3 years before house prices starts becoming declining.