Sunday, May 01, 2005

John Templeton is Another Smart Guy

This is another good article from None other then John Templeton believes we are in the middle of a real estate bubble. I would say he is a pretty smart guy.

"The U.S. economy, increasingly dependent during the last few years on cash-out re-financings, will be adversely impacted by plunging home prices and the concomitant reduction in available home equity. The possibility of this type of unraveling is so great that John Templeton currently believes that the risk of a 50% decline in U.S. home prices is “quite possible.”[xiv] He notes that the Japanese real estate market, which peaked in 1990, has fallen by roughly 75% over the ensuing 14 years. Mr. Shiller shares Templeton’s pessimism but won’t predict how far prices could fall. What he does say will certainly come as a surprise to many home buyers today: “I don’t think housing prices will be higher five to ten years from now.”[xv]"


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