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Sunday, September 16, 2007

Greenspan: House Prices to Fall Significantly

by Calculated Risk on 9/16/2007 05:52:00 PM

From the Financial Times: Greenspan alert on US house prices (hat tips Carlomagno houston)

US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market.

In an interview ahead of the release on Monday of his widely-anticipated memoirs, the former chairman of the Federal Reserve said the decline in house prices “is going to be larger than most people expect”.
Mr Greenspan said he would expect “as a minimum, large single-digit” percentage declines in US house prices from peak to trough and added that he would not be surprised if the fall was “in double digits”.
As Fed chairman, Mr Greenspan had talked about “froth” in the housing sector, but never said there was a bubble in the market as a whole. His successor Ben Bernanke has also avoided the word “bubble”.

But Mr Greenspan told the FT that froth “was a euphemism for a bubble”.
See the article for Greenspan's comments on SIVs and commercial paper. Greenspan is trying to generate interest for his memoirs, but these comments on the housing bubble and falling house prices are still note worthy.