12/06/2005

Will Incomes Catch Up with House Prices

The market is not in a bubble; even a modest downturn in housing would be felt throughout the economy, and a nationwide decline in housing prices remains highly unlikely. These points were covered in today's speech by the CEO of Freddie Mac, an institution which competes with the banks and is designed to help consumers obtain their mortgages. While the East and West Coasts have climbed steeply in housing prices, across large areas of the country incomes have kept up with prices. Richard Syron believes a spike in interest rates would be bad for the housing industry, a major driving economic force in the entire country, helped significantly by government sponsored Freddie Mac. Housing bubble vs. soft landing is the question for the 2006 future, and many feel that there will be no "crash" in prices, but various soft or somewhat harder landings depending on geographic region.

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