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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 329.91-1.8%Nov 13 4:00 PM EST
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To: Wally Mastroly who wrote (2981)10/24/2004 10:42:22 PM
From: Wally Mastroly  Read Replies (2) of 10065
 
Greenspan Plays Down Fear of Housing Bubble

(October 20, 2004) -- Federal Reserve Chairman Alan Greenspan once again shrugged off concerns about a housing bubble, maintaining that "a national severe price distortion seems most unlikely in the United States, given its size and diversity."

The nation's top economist, speaking before a recent meeting of America's Community Bankers, says he's not worried about speculative buying because most of that activity is tied to second homes and rentals, which account for only a fraction of overall mortgage origination.

He also says he believes most homeowners have enough equity to handle record debt loads and withstand moderate regional declines in property prices.

"To be sure, some households are stretched to their limits, but the vast majority appear to be able to calibrate their borrowing and spending to minimize financial difficulties," Greenspan remarked.

According to a recent report from Goldman Sachs, housing is overpriced by nearly 10 percent. Excess supply and speculation on the part of homebuyers remain reasons for concern.

Source: Wall Street Journal (10/20/04); Ip, Greg
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