The National Association of Realtors said yesterday that Congress should raise the federal debt ceiling in order to avoid a default that would be “catastrophic” for the national housing market’s recovery.
In testimony before the Senate Committee on Banking, Housing and Urban Affairs, NAR president Gary Thomas said that unless the debt ceiling is raised in “a timely manner,” the country would face a recession that would wipe out the recent progress made in home prices, home sales and new residential construction.
“The momentum of the housing recovery will be in serious jeopardy if Congress is unable to move past unnecessary political brinkmanship over raising the debt limit,” Thomas said. “A default, or even the perceived threat of a default, could result in a harsh and long-lasting recession, which may be even more severe than the previous economic downturn.”
Even a one percent increase in mortgage rates could lead to up to 450,000 fewer home sales, Thomas said. The increase would push out many potential homebuyers by increasing their monthly mortgage payments and debt-to-income ratios, he added.
The uncertainty of the debt ceiling combined with the shutdown of the federal government has left New York City in somewhat of a deal-making limbo, as The Real Deal reported. [Inman News] – Hiten Samtani