Greenspan Says U.S. Home Prices May Stabilize in 2008

Discussion in 'Wall St. News' started by S2007S, Apr 8, 2008.

  1. S2007S


    Didnt he say housing prices were nearing a bottom about 18-24 months ago, he didnt get that that right so why is he predicting this one......this is going to take alot longer than he thinks....

    Greenspan Says U.S. Home Prices May Stabilize in 2008 (Update2)

    By Scott Lanman and Lily Nonomiya
    Enlarge Image/Details

    April 8 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the drop in U.S. home prices will probably end ``well before'' early next year as the number of houses on the market diminishes, aiding an economic rebound.

    ``It will not be until early 2009 that we will get close to having eliminated most of this'' home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. ``But it is very likely that home prices will stabilize well before that.''

    Greenspan added that the extent of damage stemming from the collapse of the subprime-mortgage market won't be known for months. He described the credit crisis as the worst in 50 years, echoing the assessment of International Monetary Fund economists.

    ``You won't see asset markets recover until housing prices stabilize,'' said Glenn Maguire, chief Asia-Pacific economist for Societe Generale SA in Hong Kong. ``If Greenspan is correct, you'll see weakness in the economy through 2008.''

    The yield on the 10-year Treasury note fell 1 basis point to 3.53 percent as of 4 p.m. in Tokyo, according to bond broker Cantor Fitzgerald LP.

    Greenspan's successor, Ben S. Bernanke, and other Fed officials have highlighted declining home prices as a major economic risk that may further hurt household wealth and consumer spending.

    `Slow, Hesitant Recovery'

    ``Once the markets start to stabilize, especially if the real economies don't go into a severe recession,'' then ``we can expect a recovery to begin to take place,'' Greenspan, 82, said via satellite from Washington. ``It will be slow, it will be hesitant.''

    The health of the U.S. housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities, Greenspan said. The median price of an existing single-family home dropped 8.7 percent in February from a year earlier, the most in four decades of record keeping, according to the Chicago-based National Association of Realtors.

    ``Have we reached a point where prices are stable? We cannot know that for a couple of months,'' Greenspan said. ``It looks as though we're going to get a very large rate of liquidation, but not until the second half of this year.''

    Greenspan said inflation will be contained during the current slowdown before picking up as the world economy recovers.

    ``It's difficult to imagine any major breakout of inflation as economic slack continues to increase,'' he said. ``What we will see is gradually rising inflationary pressures that will probably be subdued during the current period of slack, but that will surely reemerge when economies pick up.''

    Increasing Criticism

    Greenspan spoke via satellite from Bloomberg Television's studio in Washington, answering questions from Peter Hooper, chief economist at the securities unit of Deutsche Bank, which hired Greenspan as a consultant in August.

    Greenspan, who retired in 2006 after 18 years as the U.S. central-bank chief, has come under increasing criticism for his policies as last year's subprime-loan meltdown spread into a broader financial crisis. One recent book, ``Greenspan's Bubbles'' by money manager William Fleckenstein, argues the former Fed chief helped inflate stock and home prices.

    In response to the bursting of the Internet and technology bubble and the Sept. 11 terrorist attacks, Greenspan lowered the Fed's key rate in 2001 from 6.5 percent to 1.75 percent, then reduced it further in 2003 to 1 percent, a 45-year low.

    Left to Bernanke

    He left the rate there for a year before starting to raise borrowing costs in quarter-point increments, leaving it Bernanke to decide when to stop. Some Fed critics, such as Bear Stearns Cos. economist John Ryding, say rates were too low for too long, encouraging the easy credit that helped inflate a housing bubble and has now returned to burn investors.

    Greenspan, who published his memoir ``The Age of Turbulence'' in September, has taken to defending his legacy in newspaper articles.

    Yesterday, in a Financial Times piece headlined ``The Fed is blameless on the property bubble,'' Greenspan wrote that the evidence is ``very fragile'' that Fed interest-rate policy added to the U.S. bubble and that ``it is not credible that regulators would have been able to prevent the subprime debacle.''

    ``I was praised for things I didn't do,'' Greenspan said in a Wall Street Journal interview published today. ``I am now being blamed for things that I didn't do.''

    Greenspan said today that ``the current credit crisis is the most wrenching in the last half century and possibly more.''

    Bernanke, 54, told Congress last week that the U.S. economy may contract in the first half of 2008 and for the first time acknowledged the chance of a recession.

    Later today, the Fed releases minutes of its March 18 interest-rate decision and any other conference calls in February and the first half of March. The Federal Open Market Committee that day lowered its benchmark rate by 0.75 percentage point to 2.25 percent, capping 3 points of cuts since September.
  2. From true experts, they predict the end of this in 2011.

    "But on a note of optimism, Burns notes the housing market is extremely cyclical.
    We have had times of extreme distress before, which typically last 3-5 years, and this one
    too shall pass. Burns projects that sales should be higher than current levels by 2012.
    Median resale prices will bottom out in 2010, only about 16% below the top.
    Bottom Line? There is no Bottom in Sight
    His most likely timeline is that resale stability will come back by 2011, and it will
    be even earlier for the homebuilders. He is projecting 6,000,000 home sales (new and
    existing) in 2008, but falling to only 4,000,000 in 2009. Low sales volume and high
    foreclosures will delay inventory reduction, which is required for there to be a stable

    Definately worth the read if you want to time real estate.
  3. Greenspan is a bonehead.

    His interview the other day made me want to throw my TV out the window and throw up simultaniuosly.
  4. Greenspan is a fossil
  5. Greenspan is a senile, irrelevant old twit with false credentials and a terrible track record.
  6. Greenspan reminds me of Clinton. Constantly talking about the messes that he created as if he had nothing to do with them.

  7. Excellent Commentary All

    In terms of having a chief economist at the helm, certainly he should have a handle on the basic microeconomics of individuals, namely what they typically own and strive for.

    Also this person should have a sense for what holds for a healthy economy versus an economy that is maladjusted or disconfigured.

    That is of course unless one seeks to become and maintain a disconfigured or strangely jumbled overall economy.

    It would seem normal that labor is rewarded not in loans, but in actual savings. After all, is it not savings that creates the underpinning strength of the economy....

    And this is just one facet of the Greenspan era....

    It seems if one lingers in abnormalcy long enough, they become adapted to what is abnormal, and unhealthy....

  8. The home builder stocks are all turning higher and 50 day moving averages rising? Why? The market is looking forward 6-12 months ahead when these inventories will be sold and revenues come in. That should give you a clue whats going to happen in real estate.

    Just remember real estate always comes back. How long jackasses and speculators and real estate timing idiots stay away from the game? They are getting 2-3% percent returns on the money market accounts and no one has bought anything in 3 years. How long they can postpone buying a home which is roof over ones head? How long? When it comes back we will see buyers killing each other trying to get in the house at ridiculous prices.
  9. the japanese have been waiting for 20 years, and counting.

    the real estate shills have been screeching this bs line about having to put a roof over your head, etc. for years. it was as ostensibly applicable in 2004 as in 2008, and it didn't stop the crash from happening.
  10. LOL, tell that to John Paulson & Co.
    #10     Apr 14, 2008