Peter Coy writes:
“There’s definitely speculative froth in today’s market. An April survey of consumers by the University of Michigan found that the average expectation for house price increases over the next year was 3.5%, the highest since the question began to be asked in 2007. If house prices flattened or fell, some shoppers would undoubtedly hold off to see if they could get a better deal, exacerbating the downturn. On the other hand, conservative mortgage underwriting limits the risk of cascading defaults. Houses are expensive, all right, but this doesn’t look like a dangerous bubble.”