Fannie Mae 2002 Annual Report Download - page 14

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12
“Aren’t you
worried we’re
in a ‘housing
bubble’?”
The U.S. housing sector
remains stubbornly
robust. The building,
buying, and financing of
homes, and the growth
in home values, has
continued to be so
strong that housing not
only has endured the
weakness in the U.S.
economy — housing
helped the economy to
sustain and recover.
However, after the technology
sector collapsed and the stock market
fell back, some observers have begun
to worry whether housing could
be next. Their concern is that the
housing market is in a “bubble.”
A “bubble” in a market generally
means the price of an asset has
grown so much that it has outstripped
the asset’s fundamental worth, usually
because speculation that prices will
increase drives prices even higher
until they reach an unsustainable
level and collapse.
Housing is not experiencing bubble
conditions for several reasons.
•Home prices remain relatively
affordable. Even though prices
have grown, the affordability
of housing — the link between
incomes and home costs — remains