While many are hoping the housing market is at least somewhere on the road to recovery, one economist at the International Monetary Fund says otherwise: it's getting worse.
In past housing slumps, downturns lasted 18 quarters, with prices falling 22 percent from peak to trough, says IMF Economist Prakash Loungani.
The current housing slump has lasted only 14 quarters, while prices have dropped just 15 percent, according to the Wall Street Journal.
But add to that the sheer size of the boom, when prices rose 113 percent over 41 quarters, compared with 39 percent average price gains over 39 quarters typical of previous booms, the market has even farther to fall.
“A lot of adjustment has taken place in house prices, so we shouldn’t discount that,” Loungani says, adding his numbers refer to markets in the Organization for Economic Cooperation and Development, which groups wealthier nations.
“But it’s true that we shouldn’t declare victory too soon. We’ve now had a fresh shock from what’s happening in Europe.”
In the United States at least, some good news came out of the housing market recently.
The National Association of Realtors reported that sales of previously-owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April, the best showing in five months and better than economists' expectations, according to the Associated Press.
This rise was largely due to government tax credits.
“The tax credit was a nice incentive. Maybe it pushed people off the fence, but also the key driver of their thinking is affordability,” says Dominick Prevete, regional vice president for the northern New Jersey market at Weichert Realtors.
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