Contra Costa: No housing bubble here

Housing bubble may spare East Bay


Local Federal Reserve bank chief says East Bay economy will counteract slumping real estate market

A real estate bubble will not jeopardize the Bay Area housing market, primarily because of a robust regional economy, the head of the local Federal Reserve bank said Tuesday.

"I never said for sure there was a bubble, but that it was a possibility. I guess I was inclined to think maybe there was (a bubble). But I have seen what has happened in the last year or so, and now I'm more dubious."

So what prompted a change in Yellen's analysis of the housing market in the Bay Area? Quite simply, the economy has prospered in the Bay Area. And one of the main drivers has been the robust job growth in the East Bay.

Some economists, including analysts with the UCLA Anderson Forecast, had expressed concern in recent years that the increase in California home prices was not justified because rental rates had not kept pace.

"The run-up in housing prices was really driven by fundamentals, not speculation," Snaith said. "Growth in the Bay Area economy and the state overall was not confined to housing-related sectors."

. Yellen, though, does not expect a recession, and she predicts an economic slowdown will be temporary and not long-term. Yellen in her speech to the chamber also predicted that the inflation bogeyman will spook the economy less and less as time passes.

"The most likely outcome is that inflation will move gradually lower," Yellen said.

Contra Costa Times