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Housing not facing bust, Just normalcy : experts
REUTERS ^ | 09/14/2006 | Patrick Rucker

Posted on 09/14/2006 1:29:48 PM PDT by SirLinksalot

Housing not facing bust, Just normalcy : experts

By Patrick Rucker

WASHINGTON (Reuters) - While the U.S. housing market is drifting down from stratospheric levels, the sector is just returning to normal and is not poised to crash, several economists and industry leaders told lawmakers on Wednesday.

"True housing busts are a relatively rare event," Federal Deposit Insurance Corp chief economist Richard Brown said at a congressional hearing on the housing market.

In a recent study of past housing trends, the bank regulator concluded sharp drops in housing markets are most often linked to "episodes of severe local economic distress."

With wages and employment still strong, Brown said, a real nationwide housing market crisis was not likely.

Mounting evidence of sharp slowdown in the long-hot U.S. housing market prompted the Senate Banking Committee to call in experts to talk about the implications of a potential "bubble" bursting.

Sales of new homes in July were down 22 percent from a year earlier, while existing home sales were off 11 percent.

The slowdown has put a damper on home price gains, which have flattened out considerably after several years of double-digit growth in many parts of the country.

Noting the dramatic change, Democratic Senator Charles Schumer of New York mused: "To paraphrase Shakespeare: Is there a bubble or isn't there a bubble? That is the question."

National Association of Realtors President Tom Stevens had an emphatic answer.

"Contrary to many reports, there is not a 'national housing bubble'," he said. Instead, Stevens said the slowdown reflected cooling in some overheated markets, while other regions had never even known a real warm spell.

Earlier this month, the National Association of Realtors predicted the nation's median existing home price would be up 2.8 percent in 2006 - compared to 12.4 percent last year.

"Markets in Florida, California, Arizona, Nevada, Virginia and Maryland have exhibited trends far above the local historical norm," he said, referring to areas that have seen some of strongest sales and biggest price increases during the recent boom.

"Because of these exceptional trends, it would not be surprising for these markets to experience a price adjustment," Stevens added.

David Seiders, chief economist for the National Association of Homebuilders, predicted the housing market would bottom out "around the middle of next year."

The housing sector burned especially bright during a two-plus year period leading up to its peak in mid-2005. Seiders said the cool-down should last just as long.

Still, he said the slowdown should not impact the nation's economic expansion, unless there was a further spike in energy prices or interest rates.

The FDIC's Brown said that, after a boom, housing prices are more likely to stagnate rather than drop sharply.

Prior to 2000, the FDIC observed 54 housing booms and only 21 housing busts. Of the busts, only nine followed a boom in the preceding five years.

Those housing doldrums can be "fairly painful" for homeowners, builders and real estate brokers, Brown said, but they fall short of causing distress for the overall economy.


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: bust; housing; normalcy; sanityforachange

1 posted on 09/14/2006 1:29:53 PM PDT by SirLinksalot
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To: SirLinksalot; ex-Texan

Paging ex-Texan.


2 posted on 09/14/2006 1:30:30 PM PDT by FReepaholic (This tagline could indicate global warming.)
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To: SirLinksalot

Uh oh...Hydroshock will not like this...


3 posted on 09/14/2006 1:30:43 PM PDT by what's up
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To: what's up; Hydroshock
Uh oh...Hydroshock will not like this...

When referring to another poster in a post,courtesy dictates you ping that poster

BTW, I like it just fine! ;>)

4 posted on 09/14/2006 1:34:58 PM PDT by apackof2 (You shall know the TRUTH and the TRUTH shall set you free)
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To: Toddsterpatriot; jennyjenny; nopardons; expat_panama

This thread has a "high entertainment potential" factor.


5 posted on 09/14/2006 1:38:21 PM PDT by Petronski (Living His life abundantly.)
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To: SirLinksalot

To buyers and flippers who bought property the past year, its going to sure feel like a crash to them.


6 posted on 09/14/2006 1:43:21 PM PDT by Proud_USA_Republican (We're going to take things away from you on behalf of the common good. - Hillary Clinton)
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To: apackof2
When referring to another poster in a post,courtesy dictates you ping that poster

Even when they've been banned?

7 posted on 09/14/2006 1:46:01 PM PDT by Toddsterpatriot (Goldbugs, immune to logic and allergic to facts.)
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To: Toddsterpatriot

What happened to ol' Hydro? He cuss somebody out for calling him a doom-n-gloomer?


8 posted on 09/14/2006 1:55:29 PM PDT by RebelBanker (We must not and cannot let the perfect be the enemy of the good.)
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To: RebelBanker
Maybe they discovered he was a retread?
9 posted on 09/14/2006 1:56:38 PM PDT by Toddsterpatriot (Goldbugs, immune to logic and allergic to facts.)
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To: Toddsterpatriot

Well, I missed that. Anything amusing?


10 posted on 09/14/2006 1:58:32 PM PDT by RegulatorCountry
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To: what's up
National Association of Realtors President Tom Stevens had an emphatic answer.

"Contrary to many reports, there is not a 'national housing bubble',"

Just curious as to what you would expect the president of the national association of realtors to say.....

11 posted on 09/14/2006 1:59:50 PM PDT by ContemptofCourt
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To: SirLinksalot

Normal = housing costs 120 times monthly rental.

For instance, a house that rents at $2000/month "should" cost about $240,000

Some places have a bit of a way to go before they reach this metric. ;-)

As always with real estate: location, location, location.


12 posted on 09/14/2006 2:00:44 PM PDT by glorgau
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To: SirLinksalot

Sorry, this just can't be true, there have been about 1,000 threads posted by a handful of naysayers telling us that we are 100%, absolutely, positively, DOOOOOOOOOOMED!


13 posted on 09/14/2006 2:02:52 PM PDT by goalinestan (Build it...and they won't come (as easily))
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To: RebelBanker
I liked Hydroshock.

Last post here?

14 posted on 09/14/2006 2:06:46 PM PDT by stainlessbanner
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To: SirLinksalot
I have no idea if housing prices are going to plummet, flatten, or go up, but I'm of the opinion that nobody in government would ever come out with genuine bad news even if they had irrefutable evidence. My view of most bureaucrats when asked tough questions:

Image and video hosting by TinyPic

15 posted on 09/14/2006 2:10:09 PM PDT by John Jorsett (scam never sleeps)
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To: apackof2

BTW, I like it just fine! ;>)

Me too!


16 posted on 09/14/2006 2:12:08 PM PDT by jocon307 (The Silent Majority - silent no longer)
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To: stainlessbanner
This account has been banned or suspended.

Wow, his last post was rather tame, too. Maybe it's just a timeout.

17 posted on 09/14/2006 2:26:42 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: FReepaholic

SD homes are dropping $350 a day...that aint "normal"


18 posted on 09/14/2006 2:28:18 PM PDT by BurbankKarl
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To: ContemptofCourt
If he's anything like the CEO's of the home builders, he's been very transparent and forthcoming.
19 posted on 09/14/2006 2:30:01 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: SirLinksalot

200 unit Halstead condo complex in Fairfax County, Virginia.

20 posted on 09/14/2006 2:39:11 PM PDT by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: Moonman62; stainlessbanner

That was not his/her last post. He/she was posting today


21 posted on 09/14/2006 2:40:02 PM PDT by 1035rep
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To: 1035rep; Moonman62; stainlessbanner
Hydroshock's last post
22 posted on 09/14/2006 2:53:18 PM PDT by Toddsterpatriot (Goldbugs, immune to logic and allergic to facts.)
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To: Toddsterpatriot

The thread could've been pulled. I recall two accounts being temporarily suspended, and one being banned, all at the same time, on a bubble thread that was pulled. Somebody outed somebody else; the outer got zotted and the outee got a timeout.


23 posted on 09/14/2006 3:15:40 PM PDT by RegulatorCountry
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To: SirLinksalot

Is it safe for me to come out from under the bed?


24 posted on 09/14/2006 3:36:27 PM PDT by jennyjenny
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To: SirLinksalot

Doom and Gloom WIllie Green apostles are deeply saddened.


25 posted on 09/14/2006 5:00:47 PM PDT by MonroeDNA (I eat embryos!)
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To: Toddsterpatriot
Even when they've been banned?

Sorry but its too hard to keep up with all the bannings nowadays

26 posted on 09/14/2006 5:21:25 PM PDT by apackof2 (You shall know the FACTS and the FACTS shall set you free)
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To: AdamSelene235
You hit the nail on it's head. The condo craze is pretty goofy. All those lock boxes clutter up the view. The picture speaks for itself.

Out here in Oregon, mortgage companies recently increased their television advertising blitz. A commercial just aired urging people to take out a loan on their home equity. The ad actually said, "More money to spend, and with today's low loan rates, you will be ahead every month." That ad was run on a local news report about realtors and the local housing slump. They interviewed some people who were upset because they cannot sell their homes. Then featured a veteran house flipper who moved upwards into a pricey downtown loft. Of course, he made his money two years ago. The news ended on an up beat note: "Home prices are expected to rise again by the end of the year."

Meaning, the reporter expects home prices to continue downward. Until the end of the year. The report left out the cautionary "Maybe . . ."

27 posted on 09/14/2006 6:18:19 PM PDT by ex-Texan (Matthew 7: 1 - 6)
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To: Petronski

A lot late to the "party", but thanks for the ping. :-)


28 posted on 09/15/2006 12:06:18 AM PDT by nopardons
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To: ex-Texan

I talked to several realtors in the last week or two. Some on the phone, and I visited several offices. The offices are empty, except for a few realtors at desks. Several of them admitted that there is *nothing* *happening* *at* *all*. Dead. D.E.A.D. Dead, as in "not breathing". One laughed in a rather brittle way about having to find a job soon if it doesn't improve. They told me about many price reductions, and nothing moving.

I also noticed in our weekly paper (it's a small area, but the RE market is the same in two counties, lots of Californians move up here) that a lot of the new construction houses are now renting! Odd, ain't it?


29 posted on 09/15/2006 12:33:01 AM PDT by little jeremiah
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To: SirLinksalot
I may have to face a reduction in how much I can get for the sale of my home. But its not as big a drop as I feared.

(No more Olmert! No more Kadima! No more Oslo! )

30 posted on 09/15/2006 12:35:18 AM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
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To: Toddsterpatriot; 1035rep

Thanks - I enjoy learning about both sides of the housing/RE debate.


31 posted on 09/15/2006 8:16:44 AM PDT by stainlessbanner
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