Boom is Bust

Alan Greenspan has announced that the housing boom is officially over, and no one would know better than he, having just retired from the Federal Reserve Board. He states that the housing sales are off, as are applications for homes and loans. He believes that the national housing market will remain stable as a rule.

He also warned that as interest rates rise, homeowners are less able to tap the equity in their homes, or to get credit. This lack of spending will only add the impending weakness of our economy.  Baby Boomers are especially guilty of using their houses as a savings plan, using the equity in their homes as opposed to having a savings account. When asked most claimed to have little or no savings at all.

Greenspan’s successor, Ben Bernanke, believes that the housing market will be cooling, but only as normal. The economy being what it is today, he is running a sinking ship interest wise. The federal funds lending rate has increased 16 times in the past two years, and in May rates on 30-year fixed mortgages went to the highest they have been since June 2002. ■