Although prices have fallen substantially, “assets here are not cheap“, said Martin Wolf, associate editor and chief economics commentator at the Financial Times while addressing the 2009 PREA conference.
Although there will eventually be “very, very cheap assets and great opportunities”, drops in price need to be viewed in relation to the enormity of the bubbles that had developed. “We don’t realize how big the bubbles were,” said Wolf. “We haven’t gotten used to the idea.”
For example, none of the countries that had housing bubbles have yet had their housing prices return to historical averages, said Wolf. He added that the US housing market would have to fall around 20 percent further to return to its average pricing.
“We should view the pricing opportunities selectively, rather than generally,” urged Wolf. “This is not by historic standards seriously cheap. It’s just less insanely expensive than it was a few years ago.”