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Middle-America cities that performed
evenly over the past few years – like Cincinnati,
Milwaukee and the Kansas City, Mo., area – are
likely to experience home price gains in the
20 to 30 percent range over the next five years,
while markets like Miami, Las Vegas and Phoenix
could see prices go up as much as 50 percent
during that time period, Yun said.
Yun blamed most of the softening of the housing
market over the last year on the “subprime
mess,” where consumers with blemished credit
records got loans they couldn’t afford
when the interest rates reset to higher levels.
“In fact, if you look at where home prices
fell the most, it’s the markets were subprime
loans were prevalent,” Yun said. Cape Coral,
Fla.; Detroit; Las Vegas; Miami; Orlando, Fla.;
Phoenix and Riverside, Calif. were among the
cities with a high percentage of subprime lending
and where the markets suffered the biggest downturns,
he explained.
“It’s important to keep things in
context,” he said. “While much of
the media is focusing on the fact that the rate
of foreclosures doubled this year from historic
averages, the foreclosure rate has gone from
1 percent of all homeowners with mortgages to
2 percent. Foreclosures are being driven principally
by subprime loans.”
He further explained that more than half of
today’s foreclosures are concentrated in
the subprime market. The great majority of homeowners
are making their mortgage payments on time.
Now that the subprime market has dried up, and
loans insured by the Federal Housing Administration
and those purchased by Fannie Mae and Freddie
Mac are making a comeback, the housing markets
will strengthen and prices are likely to begin
a steady uptick in the coming months, Yun said.
Yun urged the Congress and White House to enact
NAR-supported legislation to modernize FHA programs,
reform regulation of the government-sponsored
enterprises (Fannie Mae and Freddie Mac), establish
a first-time home buyer tax credit, and make
the temporary increases to the conforming loan
limits established by the Economic Stimulus Act
of 2008 permanent.
“These measures would quickly stabilize
the housing markets and get fence-sitters into
the market to buy homes,” Yun said.
“There are many reasons for people to
get into the housing market today, and very few
reasons not to. With the plentiful supply of
homes for sale at affordable prices, interest
rates approaching 40-year lows, and the strong
track record of housing as a good long-term investment,
conditions are ripe for buyers,” he added. “Those
are the facts, plain and simple.”
As for a recession, it’s not happening,
Yun said. “A slowdown, yes, but the definition
of a recession is two consecutive quarters of
negative GDP growth. It’s not in the cards – no
matter how you look at it.”
Story from National Association of Realtors |
