Federal Reserve Chairman Addresses Housing Concerns During IBS 2012February 10th, 2012 by DWM Magazine
Seating was available on a first-come, first-serve basis today for a special address given by Ben Bernanke, Federal Reserve chairman, during the International Builders’ Show taking place this week in Orlando.
In beginning his presentation, Bernanke said while the economic recovery began more than two years ago “it doesn’t feel like much of a recovery for many Americans—certainly for those of you who depend on the housing sector for your living.”
Bernanke said the state of the housing sector has been a key impediment to a faster recovery.
“In the typical economic recovery, a resurgent housing sector helps fuel reemployment and rising incomes. But as you know all too well, that scenario has not played out this time,” he said.
Bernanke also provided an overview of the state of the housing market, noting that about 1 ¾ million homes are currently unoccupied and for sale.
“While this number has declined slightly over the past few years, it is nonetheless up dramatically from the first half of the 2000s,” he said.
He also talked about other implications of the problems in the housing market.
“As homebuilders, you naturally pay close attention to the demand for new homes and their prices,” he said, adding that “the problems in housing also have implications outside the construction industry.” For example, foreclosures can diminish the values of nearby properties.
Bernanke also talked about options that are available to help with foreclosed houses. He said, for instance, land banks could handle some of those properties.
“Land banks are typically governmental entities that have the ability to purchase and sell real estate, clear titles and accept donated properties,” said Bernanke.
Given the current state of economic recovery, the high number of foreclosed homes and the inability for many potential homebuyers to obtain credit for mortgages, Bernanke concluded that “we need to continue to develop and implement policies that will help the housing sector get back on its feet.”
He added, “No single solution will be sufficient. But working together to address the many factors holding back the housing market will pay dividends in the long run.”
He also took the time to answer a few questions, one of which related to improving credit conditions.
Bernanke agrees that credit conditions are too tight for the health of financial institutes, the construction market and the economy, and said the Federal Reserve is working to improve conditions.
“We’ve recently seen improvements in credit conditions … but [we] don’t expect it to be back to normal until the economy is back to normal. But we’re extremely focused on … getting credit conditions back to being healthy,” he said.