Bubble bubble: Is the housing toil and trouble over?

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Event Summary

At an AEI event on Tuesday, expert panelists joined AEI's Alex Pollock to discuss the US housing market recovery and developments in the European sovereign debt crisis. Mark Fogarty of SourceMedia outlined the recent rapid increase in home prices, highlighting the roughly 10 percent increase in the 12-month national average. Fogarty speculated that this increase could be a "dead cat bounce," or brief recovery from a steep decline.

Tom Zimmerman of UBS Investment Bank suggested that the housing sector improvement stems from a combination of inventory trends and the entry of large-scale investors to the housing sector and government programs. Jay Brinkmann of the Mortgage Bankers Association argued that a combination of government regulation, upcoming regulatory capital standards, and consequent rising mortgage origination costs were all reasons to be cautious about a sustained recovery in the housing sector.

AEI's Desmond Lachman reviewed the precipitous increase in European unemployment rates, which have approached levels of more than 20 percent in countries such as Spain and Greece, and stressed that these unemployment rates threaten to cause political and social instability. Finally, Chris Whalen of Carrington Investment Services LLC proposed that the Federal Reserve's extraordinary lowering of interest rates approximately offsets the drag of new mortgage regulation.

--Andre Gardiner

Event Description

The great housing bubble and shrivel (1999–2012) has at last run its course, but what comes next? What should happen to insolvent Fannie Mae and Freddie Mac? Is there any way out of complete government domination of the mortgage market?

The Federal Reserve has become the world's greatest mortgage investor. Has a central-bank-financed bond bubble replaced the housing bubble? And what will be the aftermath of Europe’s sovereign debt bubble, including possible losses on deposits in Cyprus? These and related questions will be addressed by our expert panel.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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About the Author

 

Desmond
Lachman
  • Desmond Lachman joined AEI after serving as a managing director and chief emerging market economic strategist at Salomon Smith Barney. He previously served as deputy director in the International Monetary Fund's (IMF) Policy Development and Review Department and was active in staff formulation of IMF policies. Mr. Lachman has written extensively on the global economic crisis, the U.S. housing market bust, the U.S. dollar, and the strains in the euro area. At AEI, Mr. Lachman is focused on the global macroeconomy, global currency issues, and the multilateral lending agencies.
  • Phone: 202-862-5844
    Email: dlachman@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202.862.5862
    Email: emma.bennett@aei.org

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

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