WASHINGTON, May 15 /PRNewswire-USNewswire/ -- Home sales and prices
throughout most of the country are poised for improvement in the second
half of 2008, and the recovery will vary by market, Lawrence Yun, chief
economist for the National Association of Realtors(R) said today during
NAR's Midyear Legislative Meetings & Trade Expo. More than 9,000
Realtors(R) and guests are attending the conference that runs here through
Saturday.
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."
The National Association of Realtors(R), "The Voice for Real Estate,"
is America's largest trade association, representing 1.2 million members
involved in all aspects of the residential and commercial real estate
industries.
Information about NAR is available at http://www.realtor.org. This and other
news releases are posted on the Web site's "News media" section in the NAR
Media Center.
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