The Second Housing Bubble

Despite some signs of recovery, the U.S. housing market isn't out of the woods yet. According to a Wall Street Journal survey of housing-market data in 28 major metro areas, the number of homes for sale has dropped sharply, probably because of the government's efforts to save borrowers from losing their houses. It's likely that government efforts have only temporarily slowed the flow of foreclosed homes to the market, leaving markets in Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento vulnerable over the next few years. The chief economist for the Mortgage Bankers Association recently testified to the Senate that "recovery will begin when unemployment stops rising," while the president of a New Jersey appraisal firm suggested that if the job market continues declining and mortgage rates rise steeply, the market could reach a "tipping point" and crash again.