U.S. Real Estate Boom Modest Compared To Europe

by: Bespoke Investment Group

In excerpts of his interview broadcast on CNBC Monday, former Fed Chairman Alan Greenspan noted that while the boom in real estate prices in the US was impressive, the gains looked modest in comparison to other countries. Since 2000, the average price of a new home in the US has risen by nearly 50%. Of the G-7 countries for which we have data, only Japan has seen lower returns.

This begs the question -- if the reversion of prices to the mean for US real estate is negatively impacting our economy (and the profits of many foreign banks), what kind of impact would falling real estate prices in international markets have on the global economy?

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