Air Will Come Out Of Housing "Balloon"
The housing boom poster boy isn't so certain these days, even when preaching to the choir. "'The air will come out of the balloon, but it will not burst,'" David Lereah, chief economist for the National Association of Realtors said.
"Lereah balanced his bullishness with a few warnings about worrisome national and international trends that could cause mortgage interest rates to rise above 8.5 percent, his "yellow flag" level. Those trends included an intractable federal budget deficit, a rise in inflation, a weakening U.S. dollar and proposed reforms to federal taxes, Social Security and Fannie Mae and Freddie Mac."
Creating private Social Security accounts could result in a "massive transfer of wealth" from the bond market, which supports mortgages, to stocks, he said. Tax reformers have talked about eliminating the deductibility of property taxes."