Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," he said in an interview with the Wall Street Journal, reported on the newspaper's website on Wednesday.
Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities," he said. "We won't really know the market value of the asset side of the banking system's balance sheet -- and hence banks' capital -- until then," he said.
In the past, Greenspan's crystal ball has been, at best, cloudy, the Wall Street Journal noted. He didn't foresee the sharp national decline in home prices. But recently released transcripts of Fed meetings do record him warning in November 2002: "It's hard to escape the conclusion that at some point our extraordinary housing boom...cannot continue indefinitely into the future."
-Reuters
http://www.reuters.com/article/wtMostRead/idUSN1350807020080813
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