Lenders Now Say Housing Bubble Exists

Two-thirds of lenders nationwide believe a real estate bubble exists, and half believe it will burst within six months, according to a quarterly survey by Phoenix Management Services, Chadds Ford, Pa.A housing correction would result in a decline of 10%-20% in real estate prices across the United States, according to 93% of lenders polled in the company's Lending Climate in America Survey. "In the minds of lenders, the housing bubble has moved from 'Loch Ness monster' myth status to an economic reality that could have a significant, negative impact on the lives of many Americans," said Michael E. Jacoby, managing director and shareholder of Phoenix. "A year ago, 46% of lenders believed we were in a housing bubble. Today, that number has climbed to 66% -- and many of them believe a correction is imminent and could lead to a drop in housing prices of up to 20%." About 30% of the 92 participating lenders said the housing bubble has already begun to burst, while 20% said it would occur in the next six months, Phoenix reported. When asked which region is likely to be most affected by a housing correction, 30% named the Northeast and 27% named the West Coast. The company can be found online at http://www.phoenixmanagement.com.