Worth looking back on
By: Housing Wire staff
May 5, 2008
As the housing crisis spins onward, we thought HW readers might enjoy a blast from the past — 2004, to be exact. That’s the year the now-defunct Homeownership Alliance put out a report titled “America’s Home Forecast: The Next Decade for Housing and Mortgage Finance.” The authors include none other than David Berson, David Lereah, Paul Merski, Frank Nothaft, and David Seiders; it’s certainly amusing now to think about the fact that the NAR and Fannie and Freddie were once much more closely aligned than they are today.
But perhaps more amusing — and instructive — is to look at the predications that were made then for the 2004-2013 housing market.
Two million homes needed each year just to keep up with forecasted demand. A homeownership rate that was expected to top 70 percent. Prices that would average 5 percent per year in appreciation, but could reach as high as 6 percent each year if “supply constraints” continued and builders didn’t build up inventory fast enough.
With that sort of cheery backdrop, may we present to you the most optimistically incorrect housing forecast ever made.
-
May 5th, 2008 5:39 pm by Angry Renter
Very interesting post! My favorite line is:
“…while there may be price declines in certain markets that had risen too quickly, there is little possibility of a widespread national decline since there is no national housing market.”
As thought the lending driving the boom wasn’t national (indeed, global) in scope…
-
May 11th, 2008 3:40 pm by FT Woods
Wow. That’s just…staggering. Comparing pricing of a PC computer to real estate is just frikkin’ ludicrous. (p42) And people wonder why buyers got so easily sucked in to the feeding frenzy of buying homes at prices that they couldn’t afford.
This isn’t very reassuring….
Excerpt:
In fact, the last sustained drop in national average home values occurred during the Great Depression, when the unemployment rate hit 25 percent. With the national unemployment rate below 6 percent, mortgage rates low and economic growth improving, the likelihood of a decline in home prices at the national level is quite remote. [...]
Nor this:
The scale of trading in mortgage-backed securities has grown substantially. In 2003 alone, more than $50 trillion in Freddie Mac, Fannie Mae and Ginnie Mae mortgage-backed securities were traded in the U.S., as shown in Figure 28, or a record $200 billion per business day.41 Relative to the amount of these securities outstanding, this means that the average Freddie Mac, Fannie Mae and Ginnie Mae security traded 16 times over the course of the year, or about once every three and a quarter weeks. An active trading volume assures a liquid security and a steady source of funds flowing from Wall Street to Main Street.
Get your HW Fix
Join more than 3,000 bold subscribers who already get HW's daily email delivered to their inbox -- it's free, and a great way to ensure you don't miss something.
Events
2008 Sep 10 -- 2008 Sep 12
USFN Fall Default Servicing Seminar
Well-attended twice-yearly event series for servicers; closed event for USFN members and invited servicers only.
2008 Sep 17 -- 2008 Sep 20
Five Star Conference
Default and REO industry conference, hosted by trade publication DS News. Heavily attended by REO agents.
2008 Sep 23 -- 2008 Sep 24
Executive Summit on Mortgage Fraud
High-level conference focused on quantifying and managing mortgage fraud. Speakers to include execs from OFHEO, FBI, Fannie, Freddie.
2008 Sep 23 -- 2008 Sep 24
NREDC's 10th Annual FHA Mortgagees Conference
NREDC brings together the best and the brightest speakers and participants for an exciting creative synergy independent of any trade association.
2008 Oct 19 -- 2008 Oct 22
MBA Annual Convention & Expo
The annual conference for MBA members and affiliates, and the largest industry event each year.
Got something to say?
Remarks by first-time commenters will not appear immediately, and must be approved before they will appear. All comments are subject to Housing Wire's usage policy.