Monday, April 06, 2009

House Price Indexes: USA vs. Europe


The Financial Times just launched the FT Eurozone (16 countries) and FT European house price indices (Eurozone plus UK, Iceland, Norway, Sweden, Switzerland and Denmark), which track prices of new and second hand houses and apartments across Europe. The chart above shows the quarterly house price indexes for the U.S. using OFHEO data and for the Eurozone using FT.com data (with free registration).

Notice the strikingly similar pattern of house prices in the U.S. and Europe between 2000 and 2008. U.S. house prices peaked several quarters ahead of Europe and also started declining a few quarters ahead of Europe, but otherwise the home price patterns are very similar. Notice also that the quarterly index for the U.S. flattened out in the last two quarters of 2008. On a monthly basis, the OFHEO index increased in January by 1.7%, the largest monthly increase in the OFHEO index on record (back to 1991).


8 Comments:

At 4/06/2009 5:40 AM, Anonymous Turkish_Delight said...

But. But!! If it was happening in other countries over the same timeframe, how can I continue to say that the recession "started in America"? And how can I continue blaming George Bush?

Mark, you've ruined my easy scapegoat strategy!

 
At 4/06/2009 7:27 AM, Anonymous Machiavelli999 said...

But. But!! If it was happening in other countries, over the same timeframe, how can I continue blame Fannie and Freddie Mac and the Community Reinvestment Act for the housing bubble.

Unless...Fannie and Freddie were secretly subsidizing European housing mortgages! Eureeka, I GOT IT!

 
At 4/06/2009 9:35 AM, Blogger Colin said...

There is probably no bigger fan of that graph than Alan Greenspan.

 
At 4/06/2009 9:39 AM, Anonymous Anonymous said...

There was clearly a worldwide property/debt bubble driving the real estate price increases. While the CRA was unwise and caused the banks to have additional exposure to deadbeat borrowers, it is obvious that the root causes of the price increases lie elsewhere. This is hardly a valid defense of the CRA though, Machiavelli. Nice try.

 
At 4/06/2009 10:29 AM, Anonymous Anonymous said...

But. But!! If it was happening in other countries, over the same timeframe, how can I continue blame Fannie and Freddie Mac and the Community Reinvestment Act for the housing bubble.

Pathetic. Even the media is slowly catching on to the damage left-wing policies like the CRA have done to the economy.

Machiavelli999 seems impervious to rational argument. He just keeps repeating Democrat party talking points, over and over again, like a mantra.

 
At 4/06/2009 12:55 PM, Blogger BxCapricorn said...

If you remember when Fannie and Freddie were collapsing, the US bought them out because Russia and China held the majority of these two. Worldwide money (hedges, pensions, etc.) had bought the instruments (CDS, MBS, ABS, etc.) linked to this run up because it was the only way to achieve expected growth. When the financing mechanism broke down and imploded, so did the housing price bubble. You placed the horse before the cart. The same mechanism is at work right now in the stock market as the run up is being hailed as something of significance when in fact it's simply a speculation bubble. The smart money has now sold to the average sucker investor and when it plummets down to below the previous market low, a scapegoat will be blamed. It's not the object of the bubble (housing, stocks, oil, gold), that's at fault. It's the system that requires investment bubbles. Please read pages 85-89 of George Soros, "The Alchemy of Finance". It will seem like it was written this year, when it was written in the mid-1980's.

 
At 4/06/2009 1:11 PM, Blogger 1 said...

One has to wonder if there would've been such a problem of collapsed housing markets begetting collapsed finance markets if it hadn't been for federal government interference in the first place...

 
At 4/07/2009 9:45 AM, Anonymous Anonymous said...

Please read pages 85-89 of George Soros, "The Alchemy of Finance".

George Soros is mentally ill.

 

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