Housing Bubble a Myth

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.

By NAHB Public Affairs | September 30, 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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