Written Statement of the
National Association of Realtors (NAR) before the Senate Banking Committee. Here are excerpts:
NAR represents a wide variety of housing industry professionals committed to the development and preservation of the nationÂ’s housing stock and making it available to the widest range of potential homebuyers.
How does cheerleading dramatic home prices increases help the 'widest range of potential homebuyers?' The NAR continues in its written staement:
After five years of outstanding growth and being the driving force of the U.S. economy, the housing market is undergoing a period of adjustment. I have experienced this first hand as my prior home has been on the market, in Northern Virginia, for over a year. Existing home sales in July fell 11.2 percent from a year ago. New home sales are down 22 percent from a year ago. The inventory of unsold homes on the market is at an all-time high of 3.9 million, which is a 40 percent rise from a year ago. Given the falling demand and increased supply, home prices have seen less than 1 percent appreciation from a year ago compared to the double-digit rate of appreciation in 2005.
Ok. Does the NAR think there is a housing bubble?
Contrary to many reports, there is not a '“national housing bubble.'” All real estate is local. For example, the housing market in California is extremely different from Oklahoma. Home price-to-income ratio, home price-to-rent ratio, and more importantly, mortgage debt servicing cost-to-income ratio have greatly increased in some markets to worrisome levels. Markets in Florida, California, Arizona, Nevada, Virginia, and Maryland exhibit trends far above the local historical norm, thus it would not be surprising for these markets to experience a price adjustment. However, these states have solid job growth – Because of solid job growth, price declines are likely to be short-lived as new job holders provide demand and support for the housing market.
The "solid job growth" that the NAR speaks is made only possible because of the housing bubble. As the housing market declines the 'solid job growth' will reverse course and there will be layoffs in the housing industry. NAR on a what sort of landing there will be:
NAR understands that the housing sector could not maintain a record setting pace indefinitely. A soft landing is certainly possible and under the right circumstances likely, but that soft landing is critically dependent upon policies that support a transition to a more normalized market and mitigate changes in local markets in the availability of mortgage financing and other essential elements to homeownership
They conclude by saying "The NAR stands ready to work with Congress to continue to open the door to the American Dream of Homeownership." A lower price would certainly help.
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