Economist's Commentary: April 15, 2008
U.S Home Prices from the Outside
By Lawrence Yun, NAR Chief Economist
After experiencing better than a 50 percent gain during the boom years, the national median price declined 1.4 percent in 2007. Many are debating the magnitude of the likely peak-to-trough price decline in the U.S. after the great outsized home price gains during the boom years. Home prices grew just too fast in relation to income — as some say — and prices need to readjust further.
From a foreigner's perspective, U.S. home prices are quite affordable simply from the greater purchasing power of foreign currency in relation to the weak U.S. dollar. Brazilians are seeing a 25 percent price reduction in U.S. homes from just 3 years ago. Brits are rightly asking — where was the great U.S. housing market boom? A typical U.S. home barely inched up from 106 British Pounds in 2001 to 109 Pounds in 2007. By the Euro, which grew in strength even faster than the Pound, home prices depreciated from 2001 to 2007 by 7 percent.
The charts below show U.S. price conditions for a few metro markets in different foreign currency denominations. Combine the better buying conditions and from better economic conditions abroad, many of the REALTORS® based in resort and vacation destinations should anticipate more foreign purchases in the U.S. this year. Anecdotal stories abound on foreign purchases.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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