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Febrero 21, 2007 Housing prices are falling is the US. Where else?
Despite a wide consensus of housing overpricing (real state in general) almost in any national market, prices seem resilient. Contrary to expectations we have hardly seen any significant price correction recently. In mid 2006 Nouriel Roubini from New York University declared:”This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices". This was not the only voice. The Economist started talking about a housing bubble already in 2002. And others have raised similar opinions. No matter how you look at housing prices, whether in terms of yields of home ownership or the ratio of house prices to income and rents, you get to the same conclusions, houses are overpriced. Last month the rate of growth of prices decreased in the UK but still prices were going up. The most remarkable movement in housing prices was reported Thursday by the National Association of Realtors (NAR) for the US. According to the NAR, prices for single-family homes fell in more than half of the nation's 149 biggest metropolitan areas in the last three months of 2006. Whereas the median price of a single family home dropped 2,7 %, there are specific locations where the drop has been much steeper. In New Orleans median prices fell by 9, 3 %. Informative is also the level of sales and the number of homes in the market. Sales dropped in 40 out of 50 states and the number of homes on the market soared. This might suggest that more price corrections are expected and that the market has not yet hit the bottom as some suggested. This dynamics might be mimicked in other countries were home prices have boomed. Who is next? 
Posted on 21 Febrero 2007 in Financial Markets Trackback PingsTrackBack URL for this entry: CommentsI hope it won't be us. As Spanish economy is widely based in real estate, price droppings would affect seriously the welfare and the families economies seriously. We live in an indebted country, many householdings asked for a loan over what they would usually be able to afford fue to the low interest rates. If rates rise, and prices drop, we will face a huge economical problem. But it won't be nothing compared with the crisis we will face if the big real estate companies, indebted to their limit, begin to see the prices of their products drop and could not afford to pay back their loans. What do you think is the more realistic scenario for the next years? Posted by: Angélica at Marzo 3, 2007 12:41 AM Post a comment |
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