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...Here's how it works: if the price of buying a house divided by the cost of renting an apartment is higher than usual, then houses are more expensive than they should be. A lower-than-normal ratio suggests good value. Changes in these data are of interest not just to potential buyers trying to figure out if it's time to finally jump off the sidelines but also to current homeowners wondering how much more pain they're due for, as well as to policymakers angling to prop up prices. At TIME's request, Moody's Economy.com ran numbers...
...year average of 17.7 but significantly lower than where the ratio stood three years ago, 24.4. By doing some additional math (which we'll explain later), we can surmise that house prices still have to drop 4.6% over the next five years, assuming the price-rent ratio returns to normal over that period. Funny how that almost doesn't seem so bad at this point. And if we look at the entire U.S., which includes many rural areas unaffected by the house-price run-up, the picture is even better - we should be seeing average house-price appreciation...
...some assumptions about what will happen in the apartment market. Property & Portfolio Research does such a forecast, which is how Economy.com parlays price-rent ratios into projected house-price appreciation. Those figures tell us that the housing market remains a lumpy place - were price-rent ratios to return to normal, San Antonio would see a 22% drop over five years while San Diego would experience a 28% gain - but, again, price-rent ratio is just one tool for understanding where home prices are headed. Plus, there's that reality, sadly familiar to us all by now, that house prices...
...dollar-yen exchange rate is reaching a sustainable equilibrium and that the yen isn't as strong as it appears. "The yen's level until last year was abnormally weak," says Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co. "Now it's coming back to normal...
...Moscow began turning off the gas to Ukraine's pipes on Jan. 1, and by Tuesday it had reduced the supply to one-fifth its normal flow. On Wednesday, it cut the supply entirely. By then, Austria, Hungary, Serbia, Greece, Croatia and Bosnia all reported a virtual shutoff in gas deliveries, and a resulting shortage in homes and businesses. So did Bulgaria, where the chill of the Russian gas cut was so swift - and where reserves are so low - that officials said they would consider restarting an unused nuclear power plant to compensate...