mr. lubell. dr. wachter, will you proceed? >> chairman johnson, a ranking member shall be and other distinguished members of the committee, thank you for the invitation to testify today. it is my honor to be here to discuss the current state of the nation's occupied housing markets. at this time, housing markets for single-family own homes are fragile. the recent data available for the residential price index show that home prices continue their decline in january, 2011 with prices down over 34% for the peak value. for the fourth quarter of 2010, again, the most recent data available, the census bureau reports homeowner vacancy rates has increased. now at 2.7% up from 2.5% in the third quarter of 2010. this is merely a 50% higher than in the historical average rates for single-family homes. the census estimate is that home prices will continue to decline in the range of five to 10% in the coming months. this is due to the unsolved inventory plus the so-called shadow inventory. their expectations of c

mr. lubell. can you discuss the structural barriers to the housing recovery that may exist in the financial system? >> there is right now, of course, great deal uncertainty about the future structure of the housing finance system. and while that may not be weighing on housing prices at this moment, as we go forward that is likely to be an increasingly important factor in the uncertainty of the future of housing prices. i'd like to reiterate that housing is different than most commodities and goods in that it is an asset. this price is very determined by households expectations of the future. so for example, future scarcity of housing finance would impact housing prices today. >> mr. lubell, are there barriers to financing affordable rental housing in the current market? if so, how could these be overcome? >> the short answer is yes, there are barriers to financing affordable housing, particularly affordable rental housing. but also owner occupied housing. to some extent they are starting to resol

mr. lubell. dr. wachter, can you discuss the structural barriers to the house in -- the housing recovery that may exist in the financial system? >> there is, right now, of course, a great deal of uncertainty about the future structure of the housing finance system, and while that might not be weaned on the housing prices at this moment, as we go forward, that is likely to be an increasingly important factor in the uncertainty of the future of housing prices. i would like to reiterate that housing is different than most commodities in that it is an asset. the price is very determined by households expectations of the future. for example, future scarcity of housing finance what impact housing prices today. >> mr. lubell, are there barriers to financing affordable rental housing in the credit market, and if so, how can they be overcome? >> the short answer is yes, there are barriers to financing affordable housing, particularly affordable rents in house will, but also honor- occupied housing. to some ex