Former Federal Reserve Chairman Alan Greenspan said that the decline in the U.S. housing market may be bottoming and it’s “very easy to see” financial markets continuing to improve.
“We are finally beginning to see the seeds of a bottoming” in the housing industry, Greenspan said today during a conference of the National Association of Realtors in Washington. The U.S. is “at the edge of a major liquidation” in the stock of unsold properties, which may help to stabilise prices, Greenspan said.
Alas, the former Chairman seems to think there’s a chance house prices will only fall another 5%. This seems unlikely, given that they’re currently falling at a 19% rate, and these things generally don’t turn on a dime:
The former Fed chief…said housing prices could fall another 5 per cent without putting too much strain on the economy.
“We run into trouble if it’s very significantly more than that,” Greenspan said. Housing prices remain “the critical Achilles’ heel” of the economy.
Of course, Greenspan was speaking at a National Association of REALTORs event, so he was presumably forced to leave whatever analytical capabilities he possesses at the door.
See Also: Geithner: It’s All Greenspan’s Fault