Greenspan sees house price bottom in 2009

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"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," he said in an interview with the Wall Street Journal, reported on the newspaper's website on Wednesday.

...

"Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities," he said. "We won't really know the market value of the asset side of the banking system's balance sheet -- and hence banks' capital -- until then," he said.

Greenspan's forecast rests on two pillars of data.

One is the supply of vacant, single-family homes for sale, both newly completed homes and existing homes owned by investors and lenders. He sees that "excess supply" -- roughly 800,000 units above normal -- diminishing soon.

The other pillar is a comparison of the current price of houses -- he prefers the quarterly S&P Case-Shiller National Home Price Index because it includes both urban and rural areas -- with the government's estimate of what it costs to rent a single-family house.

As other economists do, Greenspan essentially seeks to gauge when it is rational to own a house and when it is rational to sell the house, invest the money elsewhere and rent an identical house next door.

http://news.yahoo.com/s/nm/20080813/bs_nm/...my_greenspan_dc

[Hilarious Clinton 452]

That's when I'm buying a house. sweet!