The head of a real estate industry group testified before Congress Thursday that defaulting on the nation’s debt would have disastrous consequences for the housing industry.
Gary Thomas, president of the National Association of Realtors, pleaded with Congress to raise the debt limit by the October 17 deadline to avoid a recession that would send the still-fragile housing recovery into a tailspin.
“A default would be devastating for homeowners whose largest asset would lose value and equity, for home buyers who would see dramatic increases in interest rates and tighter credit standards, and for entire communities that are still grappling from the impact of the financial meltdown,” Thomas said.
Thomas testified that even a 1% increase in mortgage rates could slash home sales by 450,000 and make mortgage payments too expensive for many middle-class families. Thomas also reminded Congress of the market disruptions resulting from 2011’s debt ceiling showdown, which slowed job growth and hobbled consumer confidence.
Raising the debt limit, he said, would help sustain the housing recovery, which would in turn help the rest of the economy keep growing.
“As the leading advocate for housing issues, NAR is committed to protecting the value of homeownership from the avoidable and substantial harm that would be inflicted by Congress’s inaction to avert a default,” Thomas said.