Skip to comments.Housing not facing bust, Just normalcy : experts
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.
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! ;>)
This thread has a "high entertainment potential" factor.
To buyers and flippers who bought property the past year, its going to sure feel like a crash to them.
Even when they've been banned?
What happened to ol' Hydro? He cuss somebody out for calling him a doom-n-gloomer?
Well, I missed that. Anything amusing?
"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.....
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.
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!
Last post here?
BTW, I like it just fine! ;>)
Wow, his last post was rather tame, too. Maybe it's just a timeout.
SD homes are dropping $350 a day...that aint "normal"
200 unit Halstead condo complex in Fairfax County, Virginia.
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