Fed official says another boom-and-bust housing market is not sustainable – By Steve Goldstein (Marketwatch) / June 28 2021
“It’s very important for us to get back to our 2 percent inflation target but the goal is for that to be sustainable. And for that to be sustainable, we can’t have a boom and bust cycle in something like real estate.”— Boston Fed President Eric Rosengren
Eric Rosengren, the president of the Boston Fed, expressed concern over the housing market in an interview with the Financial Times, and it comes as data shows house prices soaring. The median price for an existing home sale skyrocketed 24% in May. Other house price measures also are surging.
Rosengren noted the financial stability concerns that come from boom-and-bust real estate cycles. In 2008, there was a global financial crisis as the housing market collapsed.
Rosengren’s comments come amid intense debate at the central bank as to when it should start reduce the rate of its monthly bond purchases.
Rosengren’s view does not appear to be shared, as yet, by the core of Fed officials who set policy. MarketWatch’s Greg Robb asked Fed Chair Jerome Powell in April about the fact the central bank was buying mortgage-backed securities, which was helping to boost the housing market. Powell did not express alarm.
