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.