WASHINGTON, DC – March 10, 2011 – (RealEstateRama) — Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing on the state of the nation’s housing market. The Committee heard from industry leaders and experts, and discussed the current condition and challenges facing the housing market.
“The housing sector remains in turmoil,” said Chairman Johnson. “Today we see decreasing property values eroding homeowners’ equity, rampant foreclosures devastating neighborhoods, and a falling homeownership rate that threatens to place the option of homeownership out of reach even for qualified borrowers.
“According to the Case-Shiller housing index, home values have fallen to their 2003 levels. That has put record numbers of homeowners “underwater” on their mortgages, effectively trapped in homes they cannot sell. Meanwhile, widespread foreclosures compound the problem by driving down the value of other homes in neighborhoods. Losing one’s home to foreclosure often means the loss of the largest part of a family’s wealth, and can create broader instability in communities. Last but not least, an unemployment rate that remains near nine percent has contributed to homeownership falling to a level last seen in 1998.
“In the last few years we have seen that no segment of the population is immune to problems in the housing sector, and it is clear that addressing these problems is an urgent need for Americans of all economic backgrounds. We hope to examine these trends and their causes today.”
Below is Chairman Johnson’s statement as prepared for delivery:
“The housing market is in an incredible period of transition. Families are reeling from the impact of a bubble that burst several years ago. In many regions, prices have yet to stabilize. Regulators are striving to find the appropriate balance between adequate credit availability and improved underwriting standards. It is clear the current housing market is fragile and a strong recovery in housing is not yet underway. And as we begin debating the future of housing in America, it is important for the Committee to understand the challenges our nation faces. Today’s hearing is part of that process – we will explore various aspects of the housing market including the impact of foreclosures on the single-family market, site-built and manufactured housing, multifamily rental housing, and the availability of workforce housing.
“The housing sector remains in turmoil. Today we see decreasing property values eroding homeowners’ equity, rampant foreclosures devastating neighborhoods, and a falling homeownership rate that threatens to place the option of homeownership out of reach even for qualified borrowers.
“According to the Case-Shiller housing index, home values have fallen to their 2003 levels. That has put record numbers of homeowners “underwater” on their mortgages, effectively trapped in homes they cannot sell. Meanwhile, widespread foreclosures compound the problem by driving down the value of other homes in neighborhoods. Losing one’s home to foreclosure often means the loss of the largest part of a family’s wealth, and can create broader instability in communities. Last but not least, an unemployment rate that remains near nine percent has contributed to homeownership falling to a level last seen in 1998.
“The housing bubble peaked in 2006, and its aftermath left millions of American families underwater and struggling to cover their mortgage each month. I look forward to hearing from our witnesses regarding how changing foreclosure trends, the housing supply and falling home values are interacting to affect the housing market and economic recovery.
“Today’s hearing will also explore the state of the housing market for middle and lower-income households. The recession appears to have worsened the affordable housing crisis that already existed for so many Americans. A recent HUD study found that the number of very-low income renters with worst-case housing needs increased by 20 percent from 2007 to 2009 – the largest two-year increase in the past 25 years. Family homelessness increased by four percent from 2008 to 2009, and the number of people “doubled-up” in temporary arrangements – unfortunately, a common occurrence in many Native American communities – increased by 12 percent.
“In the last few years we have seen that no segment of the population is immune to problems in the housing sector, and it is clear that addressing these problems is an urgent need for Americans of all economic backgrounds. We hope to examine these trends and their causes today.
“As my colleagues know, we have noticed a hearing for next week with Secretary Geithner and Secretary Donovan. This will begin the long-term discussion regarding housing finance reform and I anticipate many future hearings on this topic. I ask my colleagues to reserve specific questions on that topic for next week.”
