Federal Reserve Chairman Alan Greenspan commented a few nights ago:
Nearer term, the housing boom will inevitably simmer down. As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease. As a consequence, home equity extraction will ease and with it some of the strength in personal consumption expenditures. The estimates of how much differ widely.
He goes on to predict a rise in personal savings and a decline in imports, while calling for economic flexibility between the United States and its trading partners. This seems to imply that the country is relying heavily on the outside for its economic stability.
Bill Fleckenstein cites growing supply and speculation and concludes the housing bubble will burst. The article is listed under the category “Contrarian Chronicles.”
The interesting question is which position is the “contrarian view?” As NYC Money notes in the comments below, we’ve been hearing about the impending stagnation of the housing market for a while. Is it really the less popular point of view? Then again, the market is acting in a manner that doesn’t reflect this opinion. Regardless, housing in many areas is overpriced, and for my own financial sake, I’m holding off.
Updated February 6, 2012 and originally published August 29, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.