Seiders also noted that, while the IMF found housing price busts clustered around economic recessions, “our recession now is more than a year behind us, and the economic outlook beyond the middle of this year is good. Fiscal and monetary policies already are very expansive and could become even more stimulative before long.”
Seiders also stressed that the IMF study is purely a statistical exercise, devoid of substantive analysis, and that a number of substantive factors show that the current housing cycle in the U.S. doesn’t fit the housing cycles in other countries that led to steep price declines.
Those factors include record low mortgage interest rates and the absence of constraints on credit availability, enhancements to the tax treatment of housing, strong population growth and levels of household formations (including immigration), growing shortages of buildable land and growing regulatory restraints on housing, he said.
“Housing prices have been holding up remarkably well in this market,” Seiders said, “and while we are seeing some price adjustments in certain markets where prices were rising at unsustainable rates, there are no indications on the horizon that we are about to suffer the type of major decline in prices that the IMF has identified in other countries.”
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