Greenspan Warns Home Prices to Fall
October 30, 2007
The former United States Federal Reserve Chairman, Alan Greenspan, recently commented that current home prices would surely continue to drop and that this drop would most likely have an effect on spending trends in general.
In other words, the US economy is only beginning to feel the real impact of slowing market in real estate.
As if this were not enough, many American construction workers are facing layoffs as new home constructions begin to fall. There are some estimates that this may result in as many as several hundreds of thousands of jobs being lost during the next year to year and a half.
The trouble goes beyond workers and consumers. Many of the largest home builders are faced with staggering debt, up into the billions of dollars. For some of these companies, their bonds are trading as if were junk bonds.
The last five or six years have been a boom market for housing and that prosperity was a support beam for the overall economy. With a falling housing market, the boom days seem to be over for now. Buyers who are in the market for homes, however, may find prices lower than ever before. That is one silver lining to the crisis