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Obama's bubble talk

Posted by Scott Van Voorhis August 7, 2013 10:45 AM

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OK, can't exactly call it a warning, nor is President Obama suddenly turned into a housing bear.

But the president certainly alluded to the potential of a new bubble in his big housing speech Tuesday.

Yes, I know, all the housing market cheerleaders keep telling us there is no bubble, that things have changed, that the market will even out, even magically correct itself.

Yet just because all those nasty subprime mortgages are a thing of the past doesn't mean we are somehow immune from another housing bubble.

We are seeing the housing market heat up far too quickly, driven by the Fed's campaign to keep interest rates at rock bottom levels, speculative buying of massive tracts of homes and condos by investors and increasingly ridiculous barriers to new construction in Greater Boston and other high-priced, boutique markets.

Of course, the Obama didn't mention any of those factors - he is trying to sell his plan to disband Fannie Mae and Freddie Mac as a way of preventing a future bubble.

Good luck with that - it's a little late for prevention and disbanding the Washington-based housing giants will probably take years.

The cat is out of the bag and the market forces driving home and condo prices up - not ot mention rents as well - aren't going to be so easily contained.

In fact, if it's gotten to the point where the president is starting to warn about the potential of a new bubble, we are probably already well along our way.

Here's what the president said - you can find a link to the entire text of the speech on The Wall Street Journal site.

Helping more Americans refinance. Helping qualified families get a mortgage. Reforming our immigration system. Rebuilding the hardest-hit communities. Making sure folks have a decent place to rent. These steps will give more middle-class families the chance to buy their own home, more relief to responsible homeowners, and more options for families who aren't yet ready to buy. But as home prices rise, we can't just re-inflate a housing bubble. That's the second thing I'm here to talk about today: laying a rock-solid foundation to make sure the kind of crisis we just went through never happens again.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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