Fannie Mae's Chief Economist Dismisses Claims of Housing Price Bubble
April 23, 2002
The Housing and Mortgage Markets Will Remain Strong During Economic Recovery
COLUMBUS, OH -- David Berson, vice president and chief economist for Fannie Mae (FNM/NYSE) told Columbus business and community leaders that the strength of our economic recovery continues to be in the housing sector. Berson also indicated there is no evidence of a housing price bubble as the United States economy rebounds. During an Economic Summit sponsored by Fannie Mae's Central and Southern Ohio Partnership Office, Berson provided analysis of the economy, interest rates, and the housing and mortgage finance markets. Berson said that there is a perception that home prices have become seriously inflated and will plunge, but the odds of a decline in home prices at the national level in the near future are very small.
"Home price gains should be strong this decade, even if inflation is contained, as strong underlying demographic demand for housing combines with supply constraints -- for example, concerns about the environment and sprawl -- to move home price gains well above the overall rate of inflation," said Berson. "Increases of 5.0-6.5 percent per year nationwide are likely." Today's Summit brought together business and community leaders from the housing, mortgage finance, nonprofit, and governmental sectors. Attendees included U.S. Representative David Hobson (R-OH), and members of Fannie Mae's Central and Southern Partnership Ohio Office Advisory Council and the Columbus Mortgage Bankers Association.
"I appreciate Fannie Mae's efforts in providing this important economic update for the Columbus area," said Rep. Hobson, who serves on the House VA-HUD Appropriations Subcommittee. "Fannie Mae has been a solid team player in the effort to revitalize distressed housing in Central Ohio, and encourages a vibrant homeownership environment. Dr. Berson's presentation provided an informative look into why the housing sector has proven to be so resilient despite the difficult recent economic patterns." "Dr. Berson confirmed that housing will continue to be a driving factor in Central Ohio's economy," said Cindy Flaherty, director of Fannie Mae's Central and Southern Ohio Partnership Office. "We must continue to find innovative ways to bring affordable lending products to the market to help prospective homeowners realize their dream of homeownership."
The Economic Summit is part of the company's five-year, $9 billion investment plan for Central and Southern Ohio to help finance affordable housing for more than 129,000 low- and moderate-income families in 59 Ohio counties. This investment is part of the company's $2 trillion American Dream CommitmentSM to help increase homeownership rates nationwide and serve 18 million targeted American families by the end of the decade.
Source: Fannie Mae
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