Greenspan: End of Housing Boom Inevitable

[On the Road]

By Glenn Somerville
Sun Aug 28, 1:43 AM ET

JACKSON HOLE, Wyo. (Reuters) - U.S. home prices could fall as the housing surge "inevitably" slows, Federal Reserve Chairman Alan Greenspan said on Saturday as he cast doubt on central banks' ability to sway such asset values.

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The central banker famed for Delphic utterances offered an unusually blunt assessment of the challenges he sees facing his still-unknown heir and his views of issues such as inflation targets, economic imbalances and the budget gap.

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Analysts called Greenspan's warnings timely but said he was not signaling an imminent collapse, just pointing out that double-digit house price gains could not last forever.

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Some economists have criticized Greenspan for letting what they view as a house price "bubble" develop, equating it to the one that swept technology stocks to stratospheric levels before bursting in 2000. But Greenspan argues the Fed's role is to mop up after bubbles burst, since they are hard to spot and deflate safely.

http://news.yahoo.com/s/nm/20050828/bs_nm/economy_fed_greenspan_dc

[displacedtexan]

1. Did you read the DU Blog Box column on Friday?

It's still up on the home page.

I cited a securities trader, who sees the warning signs of either a burst bubble or hissing itself to death.

[On the Road]

2. I've Seen a Dramatic Turnaround in Baltimore Over the Last Few Weeks

Earlier in the summer, sellers were holding out for higher prices and having no trouble getting them. Lower-end homes were selling for almost double what they were three years ago.

Now, all of a sudden, homes are piling up on the market. Wholesalers are taking longer to unload properties, and rates are flat. It's happening -- just a question of how far down it will go.