According to former Federal Reserve Chairman Alan Greenspan, we don’t have to worry about the housing market anymore. That’s because Greenspan thinks the worse is over for housing.
Speaking at a conference in Calgary, Alberta, the Former head of the U.S. Fed said that a flattening out of weekly U.S. mortgage applications is an indicator the worst of the housing correction is behind us. That’s funny. New Fed Chief Ben Bernanke is so concerned about housing that he expects the U.S. housing correction to knock a full percentage point off U.S. economic growth in the second half of 2006.
While I was never a big fan of Greenspan, believing the Fed under his regime sent interest rates too low in the first place causing the housing bubble, I personally think Greenspan has the housing prediction all wrong. Being involved in real estate for over 20 years, I can tell you house price expansions and contractions take years to happen. They’re not over within months.
Maybe Greenspan should be here with me in Miami. There’s a glut of properties for sale here, especially vacation condos. The city is overbuilt, projects that should have been started months ago are on hold, and too many agents are chasing a decreasing pool of buyers.
The real estate mood down in Miami has decisively changed. Real estate agents are no longer selling projects from the marketing angle of “only a few units left in this building.” Now the angles are “price reduced…” or “seller will pay closing costs…” or “free appliances…” among other gimmicks.
I very much doubt the current mood I see in the housing market in Miami could change soon. Maybe Greenspan needs to say something at these conferences where he’s allegedly getting thousands of dollars an hour for his wisdom. I think instead of hearing Greenspan, investors should come to Miami and see for themselves what’s really happening in the housing market. I can tell you I see the worst still coming. Sorry Alan… need to disagree with you again!