Home Price Declines Catching up Globally
I wrote a while back on how the US was leading home price declines earlier this year. Looks like the world has caught up to this unfortunate trend and pushed the relative US declines to the middle of the pack. As the most recent IMF economic report shows, the US median home prices declined by 5%, much lower than falls of 7% plus in countries like the New Zealand and Denmark which had housing booms/bubbles of their own. I think the rate of global declines for the remainder of 2008 and early 2009 will be even worse.
Falling home prices (and the mortgages written on these homes) are the root cause of the current financial crisis and until house prices stabilize and recover it is unlikely that the financial sector will. Historically, recessions that follow housing busts tend to be deeper and as consumers we need to prepare for this. While across the board declines do not bode well for the global economy either, one silver lining for American's is that at least the rate of decline of US housing is slowing from its 15% rate over last year. This may mean we may see house prices stabalize in 2009, and possible start appreciating in 2010. So if you are looking to buy, next year may be a great time to do so. Providing you are able to put 20% down of course.
Related Posts:
> Foreclosure Rescue Scams - Coming to your Neighborhood
> A look at the Pros and Cons of Reverse Mortgages
> The housing crisis and wealth decimation
Liked what you read? Then consider subscribing (free) to get the latest articles delivered directly via RSS or Email
October 27, 2008 3:00 PM
Only 5%? Listening to the media you'd think it was a lot worse than that.
October 28, 2008 9:20 AM
The most recent Case-Shiller data shows declines are infact worse than IMF estimates (from marketwatch.com):
Home prices in 20 major U.S. cities dropped 1% in August compared with July and had fallen a record 16.6% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with a year ago. Only two of the 20 cities showed price gains in August: Boston and Cleveland. The largest declines in August were found in the San Francisco metro area, where prices fell 3.5%.
In the past year, Phoenix and Las Vegas have had the largest declines, down nearly 31% in both cities. For the original 10-city index, prices fell a record 17.7% in the previous 12 months
October 29, 2008 7:17 PM
Looks like more pain is come and the median goes up past 5%. Definetly becoming a good time to buy.