great caesar's ghost writes:
Would very recentlybe before or after he recommended prospective buyers to use ARMs?
great caesar's ghost | 05.20.05 - 5:25 pm | #

Movie Guy writes:
"But when home prices slow, only those who purchased homes just as the prices begin to drop will be impacted by the decline, Greenspan said."

I don't believe this for one minute.

--
Movie Guy | 05.20.05 - 5:57 pm | #

Jason Wright writes:
There was an article in todays SF Chronicle: almost 70% of homebuyers in Marin, San Francisco and San Mateo counties chose ARMs in the first two months of this year...
Jason Wright | 05.20.05 - 6:12 pm | #

Tom Marney writes:
I don't particularly care about recent buyers of homes. What I care about is:

"There's a risk that consumer consumption may decline if the housing market slows, Greenspan said. 'If it occurs, and eventually it will, it will reduce the fairly large and still accelerating degree of extraction of equity from existing homes,' he said. 'This has been a major force in financing consumption expenditures.'"

Not very comforting news for most people. Except it isn't exactly news...
Tom Marney | 05.20.05 - 8:37 pm | #

cm writes:
Amazing what crap one has to listen to. One should think they know the difference between "only" and "first". Or this this one of those "subtle" attempts to tell people not to be the greater fool *now*?

And of course, it depends. The people "affected" in various ways are those who have a hard time making their payments, either because of ARM "adjustments", slipping income, inflationary non-core CPI prices, etc., and those who *have* to sell quickly for whatever reason, regardless their purchase price or date.

One thing that will surely happen when it starts is that rising mortgage shares in people's incomes and defaults will lead to declines in (paying) demand for goods and services, rippling back through the economy to other people who were previously safe and sound, and so on.
cm | 05.20.05 - 8:52 pm | #

cm writes:
Jason Wright: Don't worry. I talked to some of those people and had it explained to me how the danger of ARMs is way overblown, and they are going to move (out or on) before the lock-in term ends anyway ... no clear indication to where though ...
cm | 05.20.05 - 8:57 pm | #

Elaine Supkis writes:
And this is all so sad. When can we shove Greenspan off to Bermuda?

They don't care, They really don't care. Monetarism's death is going to be pretty bad. All over the NE are these buildings that were once banks but dissappeared into puffs of smoke when they failed in 1931.

You can read their names. My bank was founded in 1931 via Roosevelt, Gov of NY, who chartered SEFCU so state employees could cash checks and deposit their pay and not have it disappear.
Elaine Supkis | Homepage | 05.20.05 - 10:47 pm | #

idook writes:
Jason Wright: not just ARMs, *interest-only* ARMs.
idook | 05.20.05 - 11:13 pm | #

Will writes:
Of course, Greenspan fails to note that many long-time homeowners have been taking out equity through HELOC borrowing as fast as above-trend home price appreciation has created equity. Equity cash outs might make a decline in house prices, or a sharp rise in real interest rates, a problem for both distant and recent homebuyers alike.
Will | 05.21.05 - 1:32 am | #

cm writes:
Good Lord -- I snatched this link form General Glut's website -- http://www.sanluisobispo.com/mld...ss/ 11698635.htm

60-70% of Jan/Feb mortgages in (parts of?) the Bay Area were interest-only! Only 2 weeks ago somebody told me 40%, and I was shocked at that and thought it unbelievably high!
cm | 05.21.05 - 2:55 am | #

eric bloodaxe writes:
And what about the people who have "Bought", a second house as an investment?
eric bloodaxe | 05.21.05 - 10:10 am | #

Dr. Z writes:
Shorter Greenspan- only those homeowners who bought within the last 5 years should be worried.
Dr. Z | 05.21.05 - 1:45 pm | #

Tim writes:
Look at the spin applied to the headline by CNN/Money - "Greenspan sees no housing bubble".

The story is from Reuters, but the Reuters headline is "Greenspan Sees Froth But No Nat'l Housing Bubble".

Exact same story - different headline.

That's sick!
Tim | Homepage | 05.21.05 - 5:11 pm | #

Tim writes:
These links should work:

Reuters:
Greenspan Sees Froth But No Nat'l Housing Bubble

CNN/Money:
Greenspan sees no housing bubble
Tim | Homepage | 05.21.05 - 5:19 pm | #

arkady writes:
RE ponzi scheme is no different from any other in the history. 50% or more are going to feel pain.

on the other hand long-term yields are going down and down. spread between 30 years Ts and mortgages can grow though.
arkady | Homepage | 05.21.05 - 5:38 pm | #

dimitris writes:
Check out this title to laugh some more (LA TIMES)...

Hmm, who do you trust... LOL

Greenspan Sees Bubbles in Housing
http://www.latimes.com/business/...dlines- business
dimitris | 05.21.05 - 10:57 pm | #

dodecagon writes:
---"The number of occasions in which an average level of prices in the United States have actually gone down are very rare," he said.---

Sounds like Sir Greenprint during the dotcom days when he changed his tune from "irrational exuberance" to embracing the "New Economy."

I'm sure lots of folks felt, "Sure the Nasdaq is getting a little frothy. But so what if it corrects 10% or 20%, I'm still way ahead of the game."

Until, of course, the Nasdaq fell 80%.

Greenspan says that it is "very rare" for home prices to go down. But it is also very rare for home/condo prices to triple in 6-8 years during a time of historically low inflation, flattening incomes and stable population growth. In fact, it's never happened before.

Saying that a decline is unlikely is whistling past the graveyard. We are in uncharted territory and no one knows what the consequences will be or how extreme they may get---on the upside or the downside. That's what happens when you create a boom/bust economy based on speculation.
dodecagon | 05.22.05 - 2:38 am | #

eric bloodaxe writes:
Rich people just don't understand, what it is like to be poor, and have to live from paycheck to paycheck.
eric bloodaxe | 05.22.05 - 10:27 am | #

Jason Wright writes:
Who told you that?
Jason Wright | 05.24.05 - 1:59 pm | #

k harris writes:
On a related topic, today's WSJ (C10) looks at the impact of slowing retail sales on malls. There really isn't much in it that's new - it uses the likely bankruptcy filing of Linens and Things to repeat a bunch of already published information on the CRE sector.

It does, however, help to understand the linkages that exist between residential and commercial real estate. Housing down => MEW down => Spending down => Retail down => CRE down. When our host first noted the lagged relationship between the two types of real estate, some commenters claimed it just wasn't so. It is so very so. Next shoe dropping now.
k harris | 04.09.08 - 10:46 am | #