Do improved recent real-estate price statistics indicate that the recession is truly over? Under the contrary. According to columnist Wolfgang Munchau of Germany’s Financial Times Deutschland, ‘the supposed end of the drop in home prices, which has been interpreted as a sign of the end of the crisis, was a premature all-clear.’
For the Financial Times Deutschland, Wolfgang Munchau writes in part:
It appears that the climax of this violent financial crisis has passed.
Well then, keep on dreaming.
Anyone who imagines that the crisis is behind us never understood its deep underlying causes. Not only are the primary reasons for it still present, but some of them will intensify in the coming years. Hence the warning that the crisis is making a comeback is more than just a forecast. It is a challenge to those in charge to straighten out the mistakes in economic and financial policy made over recent years. But since one really shouldn’t rely on international cooperation in this area – and even less so on the competence of national governments, especially here in Europe – I’m not at all optimistic that a return of the crisis can be prevented.
In the U.S., the most recent data show that average home prices have fallen by almost 30 percent since their peak in 2006. Commercial real estate saw a price decline of roughly 40 percent. While the real estate bubble hasn’t been completely neutralized, much of the decline is now behind us. Since the end of last year, prices have stabilized. The Case-Shiller Index, which tracks changes in housing prices through April, even indicates a slight increase toward the end.
But real estate statistics should always be viewed with some caution. Transaction prices are the only prices made public. What the statistics do not take into account are sales that didn’t take place because potential sellers couldn’t find a buyer prepared to pay the listed price. So the really shocking statistic is the number of properties for sale on the American real estate market – a number that continues to grow. In June, the number of successful deals cratered.
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