It’s a great time to be a home buyer in the US. Housing prices in key states are down 15-20 per cent, and if more banks continue to report losses, then prices could fall some more. For those with good credit history and a little bit of cash to spare, it’s the perfect time to upgrade, be it in terms of the size of the house or its location. Like in India and most other parts of the world, housing prices in the US had been soaring, and when the economy started slowing in 2006 and thousands of home owners began defaulting on their mortgages, prices of homes started falling—so far, prices have fallen 11 per cent, but Goldman Sachs estimates that they may fall another 19-24 percentage points over the next 18 months. We all know what that has meant for the US economy—a subprime crisis that, the International Monetary Fund estimates, could cost banks $1 trillion in losses. However, the Organisation for Economic Cooperation and Development (OECD) has come up with a different set of figures that puts the losses between $350 billion and $420 billion.
Then, there are other—economic and social—differences between India and the US. The biggest is that the Indian economy is still growing, while in the US, the GDP growth had been slowing down over the last three years and may be moving into recession now. India, by contrast, should clock more than 8 per cent growth this year.
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