FT.com / World / US - Housing boom will not end in a crash, says Harvard

FT.com / World / US - Housing boom will not end in a crash, says Harvard: "Housing boom will not end in a crash, says Harvard
By Christopher Swann in Washington
Published: June 12 2006 22:19 | Last updated: June 12 2006 22:19

graphicMarkets seldom disappoint both bulls and bears for long. But over the coming years the US housing market looks likely to do just that, according to a study by Harvard University.

After the slump of the early 1990s and the surge of the past five years, the housing market might prove an anti-climax to all concerned. The long period of stagnation forecast by the survey would disappoint home-owners who expect big price rises but also those who missed the boat and have been hoping for a crash.

“Although housing prices are stretched, it is hard to see the catalyst for a crisis in the market,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. “The overvaluation looks pretty well balanced by longer term supports for house prices, so we may just see a few years with little action. Houses will revert to being something to live in rather than money makers.”

The study begins with some sobering observations about the record run in the US housing market. Over the past five years house prices have outstripped income growth more than sixfold – the median"