Reply to Remember the recent bubble and crash -- it could happen again

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Reply to "Remember the recent bubble and crash -- it could happen again"

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[quote=Anonymous]Everyone knows the economists had it ALL right the last time.

-"Home prices have been rising strongly since the mid-1990s, prompting concerns that a bubble exists in this asset class and that home prices are vulnerable to a collapse that could harm the U.S. economy.  A close analysis of the U.S. housing market in recent years, however, finds little basis for such concerns. The marked upturn in home prices is largely attributable to strong market fundamentals: Home prices have essentially moved in line with increases in family income and declines in nominal mortgage interest rates." Johnathan McCarthy Sr Economist and Richard Peach VP, NY Fed, December 2004

-"Yet basic economic logic suggests that this apparent evidence of a bubble is anything but. Even in the highest-price cities, housing is, at most, slightly more expensive than average." Chris Mayer and Todd Sinai, Professors,  Columbia Business School 09-19-2005

-"While such signs of speculation are troubling, there is no sign that there is a housing bubble." James Glassman, American Enterprise Institute 05-24-2005

-"Housing bubble? What housing bubble? The signs are in place for a further run-up in real estate. Breathe easy, mortgage holders. There’s still no place like home." - Jim Cramer "Mad Money" CNBC 12-08-2003

-"Mr. Hassett of the conservative American Enterprise Institute thinks housing prices will be pretty much O.K. He acknowledges there might be some bubble dynamics at play in some regions. But he argues that for the most part people are paying more for homes because their incomes are higher and interest rates are lower, reducing the cost to own a home. He expects that rising interest rates would raise this cost and home prices would then decline proportionately. But he sees no reason to expect a catastrophic decline. 'I don't think a catastrophe is very likely,' he says."- NY Times July 25, 2004
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