Dean Baker Housing Quotations

Until the psychology starts to shift or interest rates jump up, the market will probably stay strong, ... So far we haven't seen that. We've had a lot of stories on housing bubbles lately. Maybe that will affect the psychology.

Clearly, housing is going to be a drag on the economy; the question is how much does housing slow and how quickly.

There is a large psychological element behind current housing prices,

Normally when you talk about housing bubbles bursting, you're talking about a specific local market. But we've never had a nationwide run-up in home prices like this. I don't think it's realistic to think the decline won't also be national. I think a 15 percent nationwide decline is very plausible. In many bubble areas, could be looking at 20-25, maybe 30 percent declines.

With the housing bubble now having generated comparable levels of unsustainable wealth, the economy faces even greater dangers today than it did when the stock market crashed.

People are really stretched. They are banking on everything turning out right for them. That they won't lose their jobs, that they won't run into unexpected expenses. They're betting that the housing market will continue to appreciate.

He consciously promoted the housing bubble as a way of boosting the economy.

I wouldn't necessarily predict this would be a trigger, but I wouldn't rule it out either. It wouldn't surprise me if you see money leaving the secondary mortgage market, leading housing prices to fall.