US Median Home Prices See Decline

Economists say that the 1 to 2 percent drop in median home prices in the US may continue into 2008 and even 2009. One of the biggest factors here is that many in the government said that this decline in pricing could not happen. . .

According to David Leonhardt and Vikas Bajaj in a New York Times article, “Rather than being limited to the once-booming Northeast and California, price declines are also occurring in cities like Chicago, Minneapolis and Houston, where the increases of the last decade were modest by comparison.” One of the biggest factors here, according to the New York Times, is that many in the government said that this decline in pricing could not happen, but on the bright side Leonhardt and Bajaj say, “while the housing slump has already rattled financial markets, it has so far had only a modest effect on consumer spending and economic growth.” In a study released by The Division of Research and Monetary Affairs, part of the Federal Reserve Board, “the causes and consequences of the dramatic increase in household indebtedness,” are outlined. The report claims personal savings rates have fallen from an average of 9.1 percent in the 1980s to an average of 1.7 percent so far in the decade and between the exact same periods, “the ratio of total household debt to aggregate personal income . . . rose from 0.6 to 1.0.” Although the overall numbers seem to be in decline it still makes a large difference just what region of the country you are in. To learn more you can read the Federal Reserve Boards report via PDF file.