Debt, Speculators, Will Crush Bubble: Analyst
Gary Gordon is the chief investment strategist for UBS Investment Research and he sees the US debt levels stopping the housing bubble in it's tracks. " As borrowing slows, so will spending, and as spending drops, corporations that make the goods will cut back on hiring."
"Gordon believes the 'off-the-charts fantastic housing market' the nation as a whole has enjoyed soon will come to an end. Rising interest rates will put the brakes on home-buying, and then the 'huge number of homes in the U.S.' that are owned by speculators are likely to come suddenly onto the market. Home prices will begin to flatten, lenders will tighten their credit standards and the air will begin to come out of the housing market, he predicted. How soon will it all occur?"
"I’d be very surprised if it doesn’t start within the next six to 12 months."
Borrowers are already pulling back. "MBNA said in addition to the charge, its results were affected by 'unexpectedly high payment volumes' from U.S. credit card customers. The higher payments reduced managed loans in the quarter more than in prior years, the company said."