Wednesday, January 12, 2005

Fed's Gramlich plays down idea of U.S. housing 'bubble'


WASHINGTON, Jan 12 (Reuters) - Federal Reserve Governor Edward Gramlich said on Wednesday that high U.S. housing prices did not necessarily signal a "bubble" but might simply reflect scarcity of available land for construction.

Participating in a panel session on low-income housing at the Center for Economic and Policy research, Gramlich suggested a scarcity of building sites also was a primary driving force behind housing prices.

"It's certainly possible it's a bubble (but) it's also possible for various reasons that the relative price for housing has shifted," Gramlich said.

"I actually would put a little more stock in land shortages. One can't drive around large cities without realizing that there just isn't any more land to build on," he added.

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