June 29, 2005

Business Week on the Bubble Question

Business Week tackled the bubble question last week. One of the experts interviewed was Frank Nothaft, chief economist, Freddie Mac, whose view, we'll admit, should be taken with a grain of salt given the vested interest his employer has in keeping the party going:

Housing is local, local, local by nature, and it's the local economy driving valuation of a home. The large markets people think about -- New York, Boston, San Francisco, Los Angeles, and Washington D.C. -- where we've seen double-digit home-value gains in the last three or four years, are driven by economic growth and rising family income, coupled with a 40-year low in mortgage rates. I would worry about local markets that have weak economies, where the unemployment rate has gone up over the last couple years, or where we have begun to see a bit more of a speculative fervor (by that I mean: A lot of investor vs. owner-occupant purchases).

Comment: New York economy seems okay and very low investor-to-owner ratio.
Housing Bubble -- or Bunk? [Business Week]

Posted by Brownstoner at 9:05 AM | Comments (3)
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