Federal Reserve Chairman Jerome Powell spoke recently about the dangers of the U.S. housing bubble.
Investors and regulators will note this is the first time Powell has gone on record to say the market is experiencing a bubble. While he’s warned about the rising costs of homes, he’s never gone so far as to apply the term bubble to it until now.
What do traders and consumers need to know about this? Let’s go over what Powell said below!
Housing Bubble Warning
- According to Powell, this housing bubble is the result of the Covid-19 pandemic.
- He says it started as homeowners sought to move to more suburban areas to avoid cities during the pandemic.
- Adding to that problem is an ongoing shortage of houses in the U.S.
- The Fed Chairman says this is the result of the country already being built up and zoning issues being a problem.
- Powell warns the rising price of homes can’t last.
- While he didn’t use the term “housing crash” in his statement, he did say he expects the market to “go through the other side” of the bubble.
- Even so, he says home prices should recover and reach a better middle ground between the two extremes.
Investors looking for more of the most recent stock market news will want to stick around!
InvestorPlace is ready to go with all of the biggest stock stories for Friday! That includes what’s moving shares of Fisker (NYSE:FSR), Chinese EV stocks and Chinese stocks today. You can read all about these matters at the links below!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.