Bubble, Schmubble (Update)
Yesterday, SOB Alliance charter member Porkopolis, who received long-overdue recognition in USA Today (his follow-up on that piece is here) in a Monday evening article on the blogosphere’s pork-busting efforts, sent me the National Association of Realtors (NAR) press release on their President’s Wednesday testimony at the Senate Banking Committee.
Key excerpts:
Housing prices are expected to continue to have a limited fall throughout 2006, according to testimony submitted by the National Association of Realtors at today’s Senate Banking Committee hearing on the economy. In addition, NAR noted that the sellers’ market is transitioning to a buyers’ market, which can be healthy for some local economies.
….. “Contrary to many reports, there is not a ‘national housing bubble,’” said Stevens. “We were seeing home prices and mortgage debt servicing cost-to-income ratios increase to unhealthy levels in some housing markets, which precipitate an adjustment.” Also contributing to the cooling housing market is an increase in mortgage rates of nearly one point, speculative investors pulling back and first-time buyers being priced out of the market.
Adjustments to the housing market are not unique and can often times be necessary, said Stevens.
Gee, that sounds familiar, though not as wordy. I’m referring to my responses at the link, not the rant in its earlier section from MarketWatch’s Rex Nutting, who (heaven help us) is MarketWatch’s Washington Bureau Chief. Stevens is predicting a one- or two-quarter decline; if he thought it would go longer than that, he either would have told us in his testimony, or it would have been dragged out of him in the follow-up questions.
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UPDATE: This article (requires free registration) must have been difficult for our pal Rex Nutting to write — “Weekly mortgage applications up 3.2%”
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Previous Posts:
- Sept. 12 — More Fun with Tom, Rex, and the Housing Market: A Case Study in Business Reporting Bias and Ignorance
- Sept. 7 — Fun with Tom and Rex: A Discussion of the Housing Market Situation
- Sept. 6 — Unseen Housing Headline: “Home-Price Growth Returning to Normalâ€
- Sept. 6 — Bubble, Schmubble (so far)
- Aug. 24 — Existing-home Sales “Plunge,†But This Is NOT an “Implosion†(Updated for New-Home Sales)
A sag in housing prices–even a sharp decline–does not mean the “bubble” has burst. Housing has been inflating across the board for many years. The trap will be buying into a sag, and then the bubble, still alive and well, and contemptuous of market forces, does burst.
Comment by Elliot Essman — September 14, 2006 @ 11:57 am
#1, I can’t tell whether you believe we’re in for a round of steep declines or not. My long-term bet would be on market forces, which of course can in the short-term sometimes include irrational exuberance or pessimism.
Comment by TBlumer — September 14, 2006 @ 12:06 pm