QuickTake: A Housing Bubble? Chairman Greenspan is Dubious

Don't look for significantly cheaper housing prices, said Federal Reserve Chairman Alan Greenspan in his June 9th testimony before Congress:

Because of the degree of customization of homes, it is difficult to achieve significant productivity gains in residential building despite the ongoing technological advances in other areas of our economy. As a result, productivity gains in residential construction have lagged behind the average productivity increases in the United States for many decades. This shortfall has been one of the reasons that house prices have consistently outpaced the general price level for many decades.

Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications.

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