Thursday, August 25, 2005

Economist Predicts RE Bubble Bust for Early Next Year

CNNMoney is usually so bullish on RE, but this article is a refreshing turn; it reports an economist's opinion that the housing bubble is real and will bust as early as next year. Of course, economists always seem to be wrong and, naturally, we all know that Marin is special and it won't happen here, but it is interesting nonetheless.

Some choice quotes:
"Soaring housing prices in the United States have created a real estate bubble that will likely burst early next year, Princeton University economist Paul Krugman said Thursday."

""I'll give you a forecast which might very well be wrong, but I think it will burst in the spring of next year," he said at a derivatives conference in Brazil's winter resort of Campos do Jordao."

"An expected decline in U.S. housing investment would be part of an economic adjustment process which could include the weakening of the dollar, higher U.S. exports and the reduction of current account deficits in the world's largest economy, Krugman said."

""This is how we would like to see it happening -- smoothly -- but there are many moving parts and they're unlikely to move at the same time," he said. "So it's not going to happen unpainfully.""

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