Greenspan: US heading for home price crash

[PUGalicious]

From The (London) Times:

US heading for house price crash, Greenspan tells buyers
By Graham Searjeant, Financial Editor
August 27, 2005

WALL STREET shuddered yesterday after Alan Greenspan, the United States’ central banker, warned American homebuyers that they risk a crash if they continue to drive property prices higher.

He said that the US house-price spiral had become an economic imbalance, threatening stability like the country’s trade gap or its budget deficit.

In a pre-retirement speech to fellow central bankers at Jackson Hole, Wyoming, Mr Greenspan said that people were investing in houses as if they were a one-way bet, not allowing for the risk of price falls. He said “history had not dealt kindly” with investors who kept ignoring risks.

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[Karried]

He's only about six months late -


Frothy? yeah right Greenspan.........

[MadMonk]

Sounds like we should sell the house now, live in an apartment for a year or so and then buy a house again once the dust settles.

[Karried]

Many people are trying to do just that especially on the coasts & Vegas - that's why the markets are becoming flooded with new listings and buyers are getting a larger variety of homes to choose from. It's almost a self fulfilling prophecy.

What's really scary is when the Interest only loans/ Arm loans kick in the and the payments go up and the value in the home has dropped - that's when people start to walk away... foreclosure time.

I think some desperate buyers and investors have speculated us into this mess - rents aren't keeping up in the hot markets, when they can't get enough rent to offset their mortgage payment, taxes and insurance, they try to sell - when there are so many other homes to choose from, desperate investors will drive the prices down. Messy, messy...

Homes really just need to be thought of as a place to live and possibly a tax write off, not a road to easy money because usually what goes up must come down as they say...

Of course, no one has a crystal ball so please don't take anything you read on the boards as investment advice....