Former Fed Chairman Alan Greenspan spoke yesterday to an audience of roughly 3,000 at a financial advisor conference in Washington, D.C. hosted by Schwab Institutional. Your editor, attending on a press pass, was audience member 2,986.
Alan talked far and wide on matters fiscal and economic, but his commentary about the housing market was particularly intriguing. To cut to the chase, the maestro thinks that much of the correction in real estate has passed. To quote the former central banker: “It looks like the worst is behind us.” He expects a continuation of the current correction–or inventory adjustment, as Greenspan termed it. But a collapse doesn’t look imminent, nor does he think that the downdraft in housing will push the economy into a recession.
One reason for the optimism, he explained, is that single-family housing sales are running slightly ahead of new construction. Although sales are still vulnerable to falling, he said that it’s the rate of change that matters most for divining the future, as opposed to focusing on the actual number of sales now vs. some point in the past.