Industry News

Real estate, finance experts raise red flags at ‘bubble’ hearing

ARMs, affordability are risk factors as market cools

Economists and a representative for the National Association of Realtors, in congressional testimony today, raised red flags about "exotic" mortgages and rising interest rates, energy prices and house prices, though they said they do not expect a doomsday scenario for the nation's housing market. "With rising mortgage rates, home buyers are becoming exhausted financially, which explains why sales have tumbled in high-priced regions of the country," said Tom Stevens, president of the National Association of Realtors and vice president of real estate brokerage giant NRT Inc., in written testimony. He also cited a demand for more affordable property insurance in Florida and the inadequacy of Federal Housing Administration loan limits in high-priced real estate markets. Stevens said a gradual slowdown for the housing market "is certainly possible and under the right circumstances likely, but that a soft landing is critically dependent upon policies that support a transition to a more norm...