What a Housing Bust Means for Business

Max Chafkin:

For years, economists have been warning of a possible housing bubble, but the Greenspan comments — along with a report by the National Association of Realtors last week showing that home sales declined in July by 2.3% — suggest that some kind of slowdown may be imminent. “Frankly, [housing prices] are growing at a rate that is not sustainable,” said Mike Fratantoni, an economist for the Mortgage Bankers Association, “but there should not be a dramatic impact.” He attributed price increases, 12.5% over the past year according to government data, to demographic changes, job growth, and low interest rates for long-term mortgages.

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