Gramlich Warns of Homebuying Risk

With the rise in home prices in some markets, it is getting "risky" for housing advocates to be urging low-income families to purchase a home, according to Federal Reserve Board Governor Edward Gramlich.The Fed governor told reporters that the Neighborhood Reinvestment Corp., which he chairs, has become "sensitive" to the possibility that the rise in prices has made renting a better alternative. The NRC receives federal funding to help low- and moderate-income families become homeowners. Mr. Gramlich appeared at a press briefing with Dean Baker, co-director of the Center for Economic and Policy Research, who has been warning of a housing price "bubble" and arguing that many low-income families will not benefit from buying a home at today's inflated prices. The Fed governor did not ago along with the bubble theory, but he agreed with Mr. Baker that the emphasis on homeownership needs to be more balanced.