Bernanke's speech to home builders:"housing may no longer be viewed as the secure investment it once

[stockholmer]

was"

http://www.chicagotribune.com/business/sns-rt-us-text-bernankestre8191hc-20120210,0,7803401.story

WASHINGTON (Reuters) - Below is the text of Federal Reserve Chairman Ben Bernanke's speech to the 2012 National Association of Home builders International Builders' Show, Orlando, Florida:

Housing Markets in Transition

The economic recovery began more than two years ago, but it doesn't feel like much of a recovery for many Americans--certainly for those of you who depend on the housing sector for your living, as well as for the millions of others who have seen their home values plummet or lost their homes through foreclosure. Though some progress has been made in reversing the losses in jobs and income sustained during the recession, the pace of expansion has been frustratingly slow and the unemployment rate remains very high by historical standards. The state of the housing sector has been a key impediment to a faster recovery. In the typical economic recovery, a resurgent housing sector helps fuel reemployment and rising incomes. But as you know all too well, that scenario has not played out this time. Although the precipitous declines in construction that began in 2006 are, thankfully, now behind us, homebuilding remains depressed in most areas, relative both to where it was before the downturn and to where it will need to be to meet the needs of a growing population in the longer term.

snip

At the same time, a number of factors are constraining demand. Household formation has been down, particularly among young adults. High unemployment and uncertain job prospects may have reduced the willingness of some households to commit to homeownership. Availability of mortgage credit is an important constraint, to which I will return later. Additionally, housing may no longer be viewed as the secure investment it once was thought to be, given uncertainty about future home prices and the economy more generally.

Not surprisingly, the large imbalance of supply and demand has been reflected in a drop in home values of historic proportions. Nationally, house prices have plunged about 30 percent in nominal terms from their peak and nearly 40 percent in real, or inflation-adjusted, terms. The imbalance of supply and demand has also been reflected in the decline in home construction that I mentioned earlier. Since 2009, the pace of single-family housing starts has averaged less than 500,000 units per year. During the 15 years before the financial crisis, the pace of single-family starts had never fallen below 1 million units per year.

snip

[Ruby the Liberal]

1. Was this from 2005?

[stockholmer]

3. no, but THIS is

Bernanke telling us not to worry about housing, mortgages, or car companies in the years before the recession, like denying a train wreck that is coming down the tracks. Bernanke was chairman of President Bush's Council of Economic Advisers, and now as chairman of the Federal Reserve, he's the fourth most powerful person in the world according to Newsweek.

July 2005

INTERVIEWER: Tell me, what is the worst-case scenario? Sir, we have so many economists coming on our air and saying, "Oh, this is a bubble, and it's going to burst, and this is going to be a real issue for the economy." Some say it could even cause a recession at some point. What is the worst-case scenario, if in fact we were to see prices come down substantially across the country?

BERNANKE: Well, I guess I don't buy your premise. It's a pretty unlikely possibility. We've never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don't think it's going to drive the economy too far from its full employment path, though.

[OKNancy]

2. You need to change the title of the thread

the article title is: Bernanke's speech to home builders

[stockholmer]

5. done

[Yavin4]

4. Uh, Captain Obvious (Bernake), Don't Waste Your Time Applying to be in the X-Men

Your super talent of stating the obvious 7 years after the fact is not all that impressive.

[Justice wanted]

6. What an SOB! It is because of HIS friends in the Banking industry that has caused this uncertainity

[Lionel Mandrake]

7. Good!

Housing was viewed as a "secure investment" only because people expected house prices to rise forever. People would buy houses they couldn't afford, believing they could always take a profit, if necessary, by selling their houses.

The bubble burst about five years ago. Now almost a third of homeowners have negative equity. That's bad, but it's good that people now have a more realistic view of the housing market.

Eventually housing prices will reach bottom. Soon after that, realistic expectations will be superseded by irrational exuberance, and the next bubble will start to grow. Realtors have ways of amplifying that growth, e.g., by creative accounting which makes sales prices seem higher than they really are.

[madrchsod]

8. bullshit.....

rents are exactly the same amount that a homeowner would pay for a mortgage. my daughter is paying 600 a month for a rental. if she bought the rental she`d pay less per month than her rent. my house would rent out for 700-800 per month.my payment is around 650 including insurance and taxes.there is`t a break down in the differences in markets,prices,and neighborhood stability.

when my parents bought their house in the late 40`s they were not looking for a cash register. they were looking for a decent house in a good neighborhood to raise a family. they paid 5,000 in the late 40`s and sold it in the early 70`s for 30,000. remember this crap started when we started losing jobs to south of the border and south east asia. the economy was crashing,credit was tight then the credit cards started flowing,savings and loans became the new vegas, and your home became your personal cash register.