Housing Bubble a Myth

NAHB Public Affairs
October 1, 2002
Professional Builder

	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.