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Freddie Mac head: Bubble may burstPosted by Randy on: 2005-10-03 07:50:46 in category:
Investments [ Print | Permalink / 0 Comment(s) ] Freddie Mac head: Bubble may burst By MARK JEWELL Associated Press BOSTON - Prices for luxury homes in hot housing markets such as Boston's will likely decline over the next few years, the head of home-mortgage buyer Freddie Mac said yesterday. But although appreciation should slow for more affordable homes, Richard F. Syron said, he told local business leaders that he expects no nationwide decline in home prices. Syron said the recent spike in high-end housing prices constitute a bubble that will soon burst. He did not offer a specific forecast on how far prices could decline, but he said the drop could affect the overall economy as owners of pricey homes see their property values decline and become reluctant to spend on other items, like cars. "Even a modest downturn in housing would be felt throughout the economy," he said. Across New England, the average home has risen 28 percent over the last two years, a level of appreciation that is not sustainable because only about a third of the increase can be attributed to factors such as income and population growth, he said. Syron said he expects prices for the region's middle- and lower-priced homes will continue to appreciate annually, but at a slower rate than in recent years. Syron said recent growth has caused home-equity wealth to double in the past seven years, helping to lift the nation's economy out of a recession and sustain its recent modest growth. "This has been the locomotive pulling the economy," he said. Syron, who was president of the Federal Reserve Bank of Boston from 1989 to 1994, was named in 2003 to head Freddie Mac, a publicly traded, government-sponsored corporation that is the second-largest buyer of U.S. home mortgages, behind rival Fannie Mae. The two firms were created by Congress to pump money into the home-mortgage market by buying home loans from banks and bundling them into securities for sale on Wall Street. Homepage Other open community sites http://www.business-business.biz Please support are sponsors. To design you custom retirement plan. http://www.retirement-plan.us For planning a IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management: National ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
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