June 11, 2002
Panel At Editor's Conference Sees No Housing Bubble
Inman News Features
New York - Talk of a housing bubble is just that, according to a panel of housing experts at the annual meeting of the National Association of Real Estate Editors.
Before you can conclude that a bubble will burst, "you have to believe the assumption that there is a bubble and I don't believe there is a compelling case," said Stephen Kim, home building analyst for Salomon Smith Barney, New York.
Dubbed "Housing: Is the Bubble About to Burst," the panel included Kim, Alex Perriello, CEO, Coldwell Banker, Alan Rogers, chairman, Insignia Douglas Elliman, home builder Ara Hovnanian and Robert Katz, EVP Mortgage Enterprise Ltd.
"Housing markets are cast in stone -- demographics are destiny," said Hovnanian, pointing to the seemingly unending demand for homes in the United States.
Perriello laid out an eight-point case for why housing was not going to go bust. Along with demographics, he pointed to the low cost of mortgages and shortage of housing supply as the most important factors shoring up the housing market and preventing a collapse in prices or sales.
Perriello did say that there was an 11 percent increase in housing inventory in the month of May, but said there overall supply could be gobbled up in a few short months.
He also shared statistics that compared the stock market to housing investments, demonstrating that the real estate market out-performed stocks. In the last two years, the stock market has lost value as the median home price rose an estimated 11 percent.
Even New York City, which last fall was hit hard by the terrorist attacks, had its best month ever for home sales in May, according to Rogers.
Kim indicated that the housing market is not immune from real estate cycles, it just got a "pass this time" from the recession. In the future, it will follow other economic downturns, he predicted. 9
Copyright: Inman News Service