"Whether home prices on average for the nation as a whole are overvalued relative to underlying determinants is difficult to ascertain. Among other indicators, the significant rise in purchases of homes for investment since 2001 seems to have charged some regional markets with speculative fervor.
We certainly cannot rule out declines in home prices, especially in some local markets. If declines were to occur, they likely would be accompanied by some economic stress, though the macroeconomic implications need not be substantial."
Greenspan's comments are certainly disappointing news to the housing bulls. The bubble is now on its last legs.