Constant talk about a housing bubble could single-handedly cause housing prices to moderate or dip, as the financial press attempts to worry the nation into shifting its money from real estate back into stocks.

The news media is frothy with bubble stories. Using "housing bubble" as the search, Google returns over 918,000 stories, many of which hype a coming crash in real estate prices. One story suggested that the government needs to rein in the housing market by overturning the Taxpayer Relief Act of 1997, which favors homeowners into keeping millions in capital gains which could be applied to reduce the huge government deficit.

Yet the media fails to notice inconsistencies. In February 2004 speech, Fed Chief Alan Greenspan suggested that fixed-rate mortgages were expensive, and that homebuyers should consider adjustable rate mortgages to reduce housing costs.

"Recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward," said Greenspan. "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home."

What made this advice so strange at the time is that fixed rate mortgages were at near 30-year lows, too near in yield spread of adjustable rate mortgages to be worth the risk to all but a few of the most overzealous homebuyers. The economy was poised to turn upward, which would take interest rates up with it, putting homebuyers who took Greenspan's suggestion at risk of paying more for their mortgages than they might have if they'd gotten a fixed rate to begin with.

In his July 2005 testimony before Congress, Greenspan has apparently forgotten his earlier observation that fixed-rate mortgages are a tad expensive. "The apparent froth in housing markets appears to have interacted with evolving practices in mortgage markets," he says. "The increase in the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages are developments of particular concern."

Should we really be surprised? These products of concern expand the yield spread between fixed rate and adjustable rate loans enough to make it worth the risk to ride out rising rates.

If people can grab some real estate, make more money than they ever dreamed of in the stock market with less risk, is it any wonder housing has been on an 8-year streak? And why would consumers who are having homebuying made so easy for them assume that they are making a mistake?

Luckily for them, there are plenty of pundits out there who are trying to slow what Greenspan and company didn't accomplish -- a housing market that has absorbed one-third of the nation's investment wealth.

The housing bubble is so pervasive that new products released by T-ShirtHumor.com make fun of the phrase. More ominous, T-ShirtHumor.com believes it is doing a public service with its "funny but serious warning to investors on the future of the real estate market."

The "Mr. Hou$ing Bubble" shirts, mugs, caps and other products feature a parody of the popular bath powder with a "FREE Balloon Mortgage Inside!" while Mr. Bubble himself warns, "If I pop, you're screwed." The disclaimer at the bottom of the box reads, "Not affiliated with Mr. Internet Bubble."

"America is financing and refinancing their homes with all kinds of funky new mortgage products while real estate prices go through the roof," said John Baynham, T-ShirtHumor.com founding partner and the artist behind all the site's designs. "If and when this bubble pops, a lot of people are going to take a bath and they're going to need an affordable shirt to put on afterwards."

Mr. Hou$ing Bubble may get a lot of washings before it wears out.

Published: August 11, 2005

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.