CHICAGO (Reuters) – Home prices could fall “considerably” over a number of years as a benchmark ratio of rents to prices slowly returns to its long-run average, according to a new study.
“If the rent-price ratio were to rise from its level at the end of 2006 up to about its historical average value of 5 percent by mid-2012, house prices might fall by 3 percent per year,” two Federal Reserve Board economists and a University of Wisconsin professor said.