Housing Bubble Trouble

“WITH NEW HOME SALES DOWN 10.5 percent in February, and with home prices declining for the fourth month in a row, it’s high time for a sober look at the consequences of a major housing correction. The Federal Reserve, Wall Street economists, and other observers of the U.S. economy are closely watching the housing market because it has been a key driver of economic growth over the past several years.”

Roughly a quarter of the jobs created since the 2001 recession have been in construction, real estate, and mortgage finance. Even more important, consumers have withdrawn $2.5 trillion in equity from their homes during this time, spending as much as half of it and thus making a huge contribution to the growth the U.S. economy has enjoyed in recent years (consumer spending accounts for two-thirds of GDP).”

TheStateOf . . . the Housing “Bubble.” In my opinion, the bubble is going to burst–and hard. Most people that I know have purchased homes that are far too expensive based on their salaries. Exotic mortgages are the norm, and I think Alan Greenspan was very irresponsible in seeming to endorse them. Do you believe there is a housing bubble? If so, what will happen to America if the bubble bursts?