As an example of the heading , the next story I read about home prices in the USA. Why the USA? Well, The EU only bother what happens into the USA, we are feeling happy now cause the USA seems to be unhappy. As if in West-EU prices aren’t abnormal, especially the Netherlands. The main principle is that statistics central measures are used, like the median or the average. The main question remains mostly unanswered: When to use these central tendecies. Anyhow , it can be used to show that everything will be okay up to now:
Will Your House Do the NASDAQ Meltdown?
By Dean Baker
The latest data on housing sales showed that the inventory of unsold homes climbed to 4.4 million in May, yet another record. The current inventory would be more than a full year of housing sales in the mid-nineties, before the housing bubble began to take off. There is also a record inventory of new homes for sale. Economists usually expect that excess supply leads to a drop in prices, and in this case, there is a considerable excess supply of houses.
By Dean Baker
The latest data on housing sales showed that the inventory of unsold homes climbed to 4.4 million in May, yet another record. The current inventory would be more than a full year of housing sales in the mid-nineties, before the housing bubble began to take off. There is also a record inventory of new homes for sale. Economists usually expect that excess supply leads to a drop in prices, and in this case, there is a considerable excess supply of houses.
In fact, house prices by many measures are already falling. The National Association of Realtors reports that the median price of an existing home is down by 2.1 percent from its year-ago level. Prices have fallen by much more in some local markets. For example, an index constructed by Yale economist Robert Shiller shows that house prices are down by 4.9 percent in the Boston area and by 6 percent in San Diego. Adjusting for inflation, Shiller’s measure implies that the real price of an average house in San Diego is down by almost 10 percent from its year-ago level. That’s real money in a city where middle-income families might have purchased a $700,000 house in 2006.