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Comments from Alan Greenspan
by: ????
May 31, 2006
Former Federal Reserve Chairman Alan Greenspan said the five-year housing "boom is over," though prices won't fall nationally.
"We're not about to go into a situation where prices will go down," Greenspan, 80, said in response to questions Thursday evening at a reception in New York hosted by the Bond Market Association. There is "no evidence home prices are going to collapse."
Greenspan echoed comments earlier in the day by his successor, Ben S. Bernanke, who said housing is undergoing a "very orderly and moderate cooling," and that central bankers are monitoring the market to help shape their analysis of the economy's performance.
Real estate groups predict home sales will fall this year as mortgage costs increase. The slowdown will help bring economic growth down to a more "sustainable" pace, Fed policy-makers said last week as they raised interest rates for a 16th straight time.
As evidence the downdraft in housing won't necessarily lead to a drop in prices, Greenspan cited the recent experience in the U.K. and Australia. "Prices just flattened, and they had bigger booms than the U.S.," Greenspan said.
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