- The Washington Times - Friday, August 2, 2002

Home prices are not artificially high even though sales are surging across the nation, the head of the National Association of Home Builders said yesterday.
In a meeting with editors and reporters of The Washington Times, F. Gary Garczynski, the association's president, dismissed the notion of a housing "bubble" that has inflated prices because of a thriving market.
"I don't see a bubble," Mr. Garczynski said.
Housing is credited with keeping the economy afloat during the recession. The market is sound because interest rates have hit historic lows, inventory of new homes is tight and demand is high, Mr. Garczynski said.
"The underlying fundamentals for housing's premier spot in what has been a tepid recovery to say the least have been solid for two or three years now. In the foreseeable future, those fundamentals are there," Mr. Garczynski said.
Federal Reserve Chairman Alan Greenspan, in testimony last month before the Senate Committee on Banking, Housing and Urban Affairs, said a housing bubble was "most unlikely."
The "sizable gains" in home prices are partially the result of low mortgage rates, Mr. Greenspan said.
The median U.S. home price hit a record high of $161,000 last year, according to the Commerce Department. Home prices have not dropped since 1994, the National Association of Realtors said in May.
New-home sales reached a record annual rate of 1 million units in June, the Commerce Department reported last week. Meanwhile, mortgage rates in July hit a 30-year low, pushing up home values and providing a cushion for consumers who have lost money in the stock market meltdown.
Existing-home sales also have been running at a brisk pace for much of the year. The National Association of Realtors is forecasting a record year for existing-home sales in 2002.
Housing in Washington will remain strong because of solid job growth, Mr. Garczynski said.
However, demand for new homes may weaken in pockets such as Northern Virginia, where major employers WorldCom Inc. and AOL Time Warner Inc. have laid off workers.
The home-builders association, the nation's largest trade group of residential developers, has become more involved in efforts to create affordable housing, said Mr. Garczynski, a Woodbridge, Va.-based developer.
In June, the association announced its support for a series of Bush administration initiatives to increase homeownership. It also supports a 10-point plan by Fannie Mae to increase homeownership among minorities.
Fannie Mae, a District-based, government-backed buyer of mortgages, said in June it will invest $700 billion over the next seven years to assist 4.6 million minority households with home financing.
Builders may find a "profit-making niche" in the construction of affordable homes, Mr. Garczynski said.
The association must urge more of its members to build affordable homes, he said.
"We've got to do a better job of that," he said.

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