National Association of Home Builders administrators and economic forecasters don’t expect the booming housing market to hit a wall. In fact, indicators suggest the housing sector should do well for the next several years, said Jim Glassman, a senior economist for JP Morgan Chase.
Glassman, who joined NAHB leaders Wednesday in a discussion of economic trends for the industry, said it is time to burst the bubble theory. Inflation has dropped to 40-year lows while household income is roughly keeping pace with escalating home prices and debt service is very manageable these days.
“There is nothing going on to suggest that home prices are straining,” he said. “I don’t think there is anything spiky going on.”
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Any increases in interest rates will likely be due to the improving health of the overall economy, such as an increase in employment and income levels, he said, and shouldn’t dramatically impact the housing market.
“A very large proportion of mortgages outstanding are locked in at fixed rates. People are pretty well protected (from interest rate increases),” he said.
“I would be shocked if we didn’t get job growth,” he added.
Dave Seiders, chief economist at NAHB, said it is surprising that interest rates have stayed as low as they have for so long, and it’s likely there will be some increases this year. Rates could rise up to about 6.1 percent by the end of the year, he indicated.
“We had a real surge of home sales and housing production in the latter part of 2003. The real question is: