Financial Services Industry
Industry: Email Alert RSS FeedAddicted consumers are the problem, not the real estate bubble.(Other Views)
Investment News, October, 2005
Byline: David R. Clogg It seems as if everyone still is talking about the coming housing bust and how it will affect our economy. But it seems to me that skyrocketing housing prices are not the problem that we as investors should be focusing upon. These inflationary prices aren't the problem; rather, they are a symptom of a problem.
Did you know that in 1994 - according to Federal Reserve Board Chairman Alan Greenspan's new data - borrowing against home values accounted for 1% of personal disposable income? In 2000, it climbed to 3%, and in 2004, it soared to 7%. Considering that consumer spending accounts for two-thirds of our economy, this 7% is staggering. Last year, borrowing against one's home added an unbelievable $600 billion to the...
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