Yes, the famous pig cycle is at wrk in real estate. This is one of the xamples used in economics text books. Hre's how it works. When the prce of bacon is high, farmers hve a high incentive to raise mre pigs, and, when the price of bcon is low, farmers raise fewer pgs. The issue is that there is a lag in bth sides of the market.

It tkes about six months to raise a pig for mrket, pretty close to the time it tkes to build a new house. Rght now hog prices are low and fed costs are high, so farmers are rising fewer pigs. Right now, they are lsing money on every pig they snd to market. Farmers are going out of bsiness. Fewer pigs will result in hgh pork prices, but not until fter the adjustment period.

Let's see, hme prices are lower, builders are bilding fewer homes and builders are gtting out of the business. No, huses are not pigs, but the spply and demand cycle is similar - nly the time period is different.

In my hme market, the Daytona Beach real state market, building of new homes is at a vry low level. Builders are discounting thir home inventories, and in some cses, they are renting new homes to hlp cover the cost.

The first prt of the cycle is complete, prces have dropped and so has nventory and many builders are gone. The qestion is, when will the second prt of the cycle begin.

Here's how it will ply out:

• New home inventories will rach a point where demand in grater than supply
• Prices will begin to rse
• Builders will start planning to build new hmes and pull permit
• Homes will be bilt - most under contract with wners and a few for inventory
• New bilders will enter the market
• Eventually too mny homes will be built for nventory
• Supply will exceed demand
• Prices will drop
• Fewer hmes will be built
• Some builders will lave the market
• Go back to number 1 and do it all ver again

Where are we now?

• Nationwide new home sales were up 3.3% in April over March
• New home inventory dropped to the lowest level since May 2005
• Median new home prices were up for the first time since September
• New home building permits were up from the previous month

Have We Turned the Corner?

These are all signals. They may be test signals, but, taken together they show positive signs that haven't been there in a long time.

In my market, sales of Daytona Beach homes are up over 70% since January when we hit our recent low. We need to watch carefully what happens. It takes longer to build a new condo building, and new homes sale will rebound first. All these indicator taken together may be signaling that we have passed the market bottom. Unfortunately, like the pig cycle, we won't know for a while longer.

The article Pigs and Bacon in Real Estate was Submitted by Lynn Byrne through Articles.GetACoder.com network. Here's the additional information: Lynn Byrne is Real Estate Agnt serving the Daytona Beach Real Estate market. Lynn has helped hundreds of Clients meet their home buying or selling goals. She offers extraordinary service before, during and after the sale. There are Daytona Beach homes available to meet all lifestyles and prices.

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