Housing Crisis Quote of the Day from Alan Greenspan


Alan Greenspan revealed more about his thoughts on the Housing Crisis in Vienna, Austria today:

“So far, prices have dropped only slightly. But it was enough to cause alarm around the world,” he said. “Prices are going to fall much lower yet.”

“There is no doubt about the fact that low interest rates for long-term government bonds have caused the real estate bubble in the United States”

“The Federal Reserve began a series of interest rate increases in 2004. We were hoping to bring the speculative excesses in the real estate sector under control. We failed. We tried it again in 2005. Failure”

Convinced yet?

Source: Yahoo Business

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Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded BiggerPockets.com when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.


  1. Pingback: The Feed Bag - Mo’ Money Eh

  2. I agree that we still have some room to go (down that is) but I also find it very interesting that despite an estimated 40,000 foreclosures in Southern California this year, prices are holding pretty steady.

    Without question, some areas were overbuilt and over-inflated and they are taking it in the shorts. However, other areas are seeing a huge rise in foreclosures but the prices are not going down much at all.

    My belief is that this time it is different. In past foreclosure markets the banks held the paper and therefore had no choice but to discount until they were off the books. This time, the paper is held in Mortgage Backed Securities owned by Funds and Foreigners.

    I just read a statistic where 2-1 foreclosures are being held for investment (rented out) vs. being sold as REO or auctioned.

    Very interesting times indeed.

    Kim Curtis
    California Mortgage Loan

  3. I think we’ve known for several years that this was coming, it was just a matter of time. Now that the “bubble” is starting to deflate the question is how fast and how far. People will remain in denial for some time, but eventually we we see significant decreases in some areas I believe.

  4. It is always interesting to come across older posts like this. Looking back, and reading what Greenspan said, makes him look pretty short sighted. It just goes to show you even the smartest guys get it wrong sometimes

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