Do you remember back in 2005 when Alan Greenspan, then head of the Federal Reserve, made this now infamous comment?
Although a “bubble” in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.
Jump forward to 2013. Compare that comment with one made in an interview yesterday with Doug Duncan, chief economist for Fannie Mae:
Some analysts like David Stockman worry that the housing is forming another bubble financed once again by extremely low interest rates maintained by the Federal Reserve. Duncan says that could be the case in some selected housing markets where prices are rising at a faster rate than the local economy is improving and building exceeds demand, but it’s not broad based.
Housing hasn’t had a chance to run up as insanely as it did in 2005, so it’s unlikely the “froth” will implode as badly as it did then. It’s still hard to believe though, that “it’s different this time”.