Housing Bubble a Myth

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There has been much speculation about a possible house price 'bubble' that will burst, resulting in dramatic declines in value such as those that have devastated the stock market.

October 01, 2002

 

NAHB President Gary Garczynski

 

There has been much speculation about a possible house price "bubble" that will burst, resulting in dramatic declines in value such as those that have devastated the stock market.

For the record: There is no bubble, and home values will not crash. Why?

  • The stock market and the housing market are not comparable; they don't perform similarly and are subject to different influences.
  • Nationally, home values have never shown an annual decrease; average stock values have plunged more than 30% some years.
  • For home values to decline dramatically, the cost of building a new home, including labor, materials and land, would have to drop significantly.
  • For the foreseeable future, builders must construct more than a million new homes annually to meet the needs generated by population growth and new household formations.
  • Most important, a home is more than a good investment with significant tax benefits. It's a place to live and a steppingstone to financial security.

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