Today, Federal Reserve Chairman Alan Greenspan said he sees a housing price bubble in "certain areas" and suspects prices are vulnerable to declines, but they will not collapse in any way that threatens the economy.

The Smarter Agent take, Center City Philadelphia: While we have not done any quantitative research, (a good job for our 2005 summer MBA interns), the Smarter Agent call is that the high end, 1-2 bedroom, over $400,000 market in Philadelphia is going to be a lousy investment (this is a Smarter Agent call not the Fed :) - for both the developer that has excess inventory and the buyer. Of the myriad projects under construction now in Center City Philadelphia in Feb 05 -- only those with the largest square footage, with the best locations and design have a chance for appreciation for their buyers. At some point within the next 36 months this market will see a 20% valuation decline. This is a gut call, open to criticism by agents and developers. If you want to pay these prices do so because you need a place to live not because you think thee is upside investment potential. Take it with skepticism any agent that does not give you some degree of caution and hypes the investment potential of these overpriced small studio, 1-2 bedroom condos in "up and coming" areas.

The Fed Chairman goes on to say....
"I think we're running into certain problems in certain localized areas. We do have characteristics of bubbles in certain areas, but not, as best I can judge, nationwide," he told the House Financial Services Committee. "I don't expect that we will run into anything resembling a collapsing bubble. I do believe that it is conceivable we will get some reduction in overall prices, as we've had in the past, but that is not a particular problem."