April 28, 2015

Comments on US Housing in 2006 are Eerily Familiar: Calm Before the Storm

Read the following calming assessments of the US housing bubble just as it reached it's zenith and began a precipitous decline, ultimately triggering the Global Financial Crisis.

Many of these sorts of comments are being repeated today in Canada.

Source: Macleans

"Our assessment at this point is that this looks to be a very orderly and moderate kind of cooling. "
- About the U.S. in 2006: Federal Reserve Chairman Ben Bernanke

“It is pretty clear that the housing sector is in a period of transition. Sales and starts are trending lower toward more sustainable levels.”
- About the U.S. in 2006: David Seider, chief economist, National Association of Home Builders

"With a general background of growing population and favourable affordability conditions, home sales are staying at very healthy levels."
- About the U.S. in 2005: David Lereah, chief economist, U.S. National Association of Realtors

The delinquency rate of federally insured mortgage loans “is the lowest in the 22 years that these data have been put together.”
- About the U.S. in 2005: Federal Deposit Insurance Corporation chief economist Richard Brown

“Conventional metrics for assessing pricing in the housing market such as price-to-rent ratios or price-to-income ratios generally fail to reflect accurately the state of housing costs. To the eyes of analysts employing such measures, housing markets can appear ‘exuberant,’ even when houses are in fact reasonably priced.”
- About the U.S. in 2005: Charles Himmelberg, Christopher Mayer, and Todd Sinai of the Federal Reserve Bank of New York

"Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels."
- About the U.S. in 2005: Federal Reserve Chairman Alan Greenspan