Greenspan comments on Housing Market

Greenspan Talks on Housing: To the ABA convention... Greenspan comments on housing market being driven by speculators and that "froth" may be affecting mortgage markets. Also, indicating homeowners should be able to absorb a drop in prices. Greenspan says housing trouble may lie in "exotic" mortgaging instruments, which can be dangerous in a rising rate environment. The housing market has seen a median 15.8% bump in prices over the past year, according to Bloomberg data. The Fed chief notes that certain locations are seeing "unsustainable" home prices. He notes that second homes are behind skyrocketing housing prices, and the variable mortgage instruments need "ongoing scrutiny." Most homeowners have sufficient "equity cushion[s]." He says, however, that it is not clear whether the housing market is "moderating," and acknowledges there may be localized problems in certain market areas.