August 22, 2006

Mortgages and Real Estate Price Booms

Did you know.....

About 40-percent of the real estate price booms have resulted in a "bust"[1][2]. These usually have coincided with tightening fiscal policies, as we've just witnessed in repeated increases in interest rates by the Federal Reserve.

"Historically, if a boom cycle was followed by a bust, real housing prices contracted 25 to 30 percent from crest to trough, lasting on average from 3-5 years." [1]

The word "mortgage" is ranked 6th in the Top 100 searched phrases (Google). Musicians will be happy to note the work "lyrics" is 7th. Snes Roms is number 10.


[1] 2006 World Economic Outlook report by the IMF.Web LINK

[2] A "bust" is defined in the 2006 WEO as the lowest 25% of price changes on record, which can be a negative change, or price drop.

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