September 27, 2005

Could there really be a housing bubble burst?

Anyone living in large metropolitan areas know that housing costs are absurdly high. Lately, much has been made of a potential housing bubble burst. For example, today an article came out in the AP titled U.S. resale housing market keeps getting hotter with the subtitle "Greenspan says most owners have enough equity to absorb a potential drop in prices". Although this article is more generous, others have talked of a bubble bursting, which may be misleading. Even Greenspan himself said, "The vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices."

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The text of his remarks is available online at the Federal Board of Governors site.


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Could there really be a housing bubble burst?