All businesses are cyclical in nature. There are several instances of a business model prospering for a long time. Once the prices reach the peak, there will be a time when the prices fall down and the people will lose money on some of the deals. It is very important for the person who is doing business to not try and time the market. This is because no one will know as to when the market will fall. Instead, the business man should try to hedge the position as this will help to prevent losses in a better method.
The real estate market has been on a rise for many years. This is because of the fact that the population of the world has been on the increase for many years and as the number of people increase, the need for housing increases too. Property prices will rise in tune with the demand. This is what happened over several years. Then came the subprime crisis. Though the crisis was mainly because of the loans being given to those who did not deserve it, the loans were given in anticipation of the fact that the real estate prices will not come down.
The prices came down so much that there were no takers for many of the real estate properties that were on sale and the people in all walks of life had to lose money because the equity markets crashed and various financial institutions that had thought that the prices will spiral up lost huge amount of money because of the crash in the prices.
So, it needs to be understood that the prices of each and every commodity will reduce over a period of time and then increase again because it is cyclical in nature. This should be understood by every investor and business man.