Don't think it's going to burst, but it's likely to deflate some.
Posted on 10/31/2005 11:27:56 AM PST by SirLinksalot
Bernanke: There's No Housing Bubble to Go Bust Fed Nominee Has Said 'Cooling' Won't Hurt
Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.
U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president's Council of Economic Advisers, in testimony to Congress's Joint Economic Committee. But these increases, he said, "largely reflect strong economic fundamentals," such as strong growth in jobs, incomes and the number of new households.
Bernanke's thinking on the housing market did not attract much attention before Bush tapped him for the Fed job Monday but will likely be among the key topics explored by members of the Senate Banking Committee during upcoming hearings on his nomination.
SNIP SNIP
Bernanke's testimony suggests that he does not share such concerns, and that he believes the economy could weather a housing slowdown.
"House prices are unlikely to continue rising at current rates," said Bernanke, who served on the Fed board from 2002 until June. However, he added, "a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near its potential next year."
(Excerpt) Read more at washingtonpost.com ...
Hopefully - Greenspan was on the way to overdoing it again, just like he blew it in 2000
Wow! The goldbuggers aren't going to like that kind of talk.
At first I was afraid that my ultrathin aluminum headgear business was going to take a hit with Greenspan leaving office, but Bernanke looks like he's going to get my clientele as hot and bothered as his predecessor.
He's smoking something. Prices cannot rise at 20% per year indefinitely, especially while the Fed is jacking interest rates. Of course, they have to jack them, to make up for the unnatural lowering of the rates that delivered the housing bubble to us in the first place.
Sure glad I'm getting to start a job this month that is not directly tied to the real estate market, I've been on that roller coaster for most of the last thirty years.
>> U.S. house prices have risen by nearly 25 percent over the past two years
and the income has.... ?
If housing has gone up 25%, and isn't coming back down, does that not imply a stealth devaluation of the dollar?
How is that possible?! We don't have inflation![/sarcasm]
It's not stealth. However the devaluation of the dollar (by the Fed keeping rates too low) came first. The housing bubble and higher commodity prices are the result of that. Perhaps Bernanke was showing that he can shovel manure just as well as Greenspan. He got the job didn't he?
Don't know but it's always best to let bubbles deflate themselves rather than have the central bank do someting about it (see 1929, US; see 1989, Japan; see 2000, US).
My husband and I are just about to buy our first home in Fresno, I hope we're making the right decision.
FYI, y'all.
None of this matters anymore, because BB has already promised to drop all of the money we need from helicopters, come what may.
My only thought is, "From Bernanke's lips to God's ears . . . " This is more of a prayer by the new Fed Chairman than anything else.
That would be a step in the right direction. The Fed should use market indicators such as the dollar index, commodity prices, and the yield curve to keep the value of the dollar stable. That's all it takes. All the hocus pocus about the wealth effect, economic overheating, full employment, etc has been nothing more than an excuse to micromanage the economy and to cause more problems than what get solved.
People don't get it. In desirable areas with nice, year round weather, people are NOT going to stop wanting to go there.
Supply and demand. And available land to build on the coastal plain in So. California is all but((GONE)).
I agree. Free markets work fine when left alone.
If you're buying for a place to live and if you can afford it, how can you go wrong? Actually, even if you can't really afford it it might be just fine. I remember when my x and I moved into our first house we couldn't buy heating oil the first year but everything worked out over time..well, with the house that is.
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