For those of you that may not have seen the latest news, former Federal Reserve Chairman, Alan Greenspan, has indicated that he believes the worst may be over for the housing downturn.
“I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out,”
“There is a good chance of coming out of this in good shape, but average housing prices are likely to be down this year relative to 2005. I don't know, but I think the worst of this may well be over”
Not surprisingly, “analysts” across Wall Street have picked up on his comments today and issued a slew of “Buy” ratings for many of the largest home builders.
The “air” of CNBC is filled with giddy talk of reaching the “bottom”!
Rather than go on with a lengthy discussion, Id like to remind you what Greenspan stated last May while attending a Bond Markets Association dinner:
"This has been quite an extraordinary boom…. home sales are off, applications are off, everything is going in the same direction. The boom is over, and you can say that with a fairly strong degree of confidence."
As well as what Bernanke said just last week:
"[The US housing market is undergoing] a substantial correction… Weaker housing likely will shave about one percentage point from gross domestic product growth in the second half of 2006,"
So, who’s right? Greenspan back in May and Bernanke now or the current Greenspan?
You tell me! Leave your comments below...