While dismissing a national bubble, Alan Greenspan acknowledged signs of market “froth” and local housing bubbles during his address to the Economic Club of New York this evening. A couple of choice quotes:
“We don’t perceive that there is a national bubble but it’s hard not to see … that there are a lot of local bubbles.”
“Even if there are declines in prices, the significant run-up to date has so increased equity in homes that only those who have purchased very recently, purchased just before prices actually literally go down, are going to have problems”
Two questions: does the Bay Area represents one of those “local bubbles”, and if so, what will constitute “very recently”?