Is the housing bust really over?
Debate over state of the market
- Duration 4:07
- Date Jul 12, 2012
Debate over state of the market
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Right now a new declaration.
The housing bust.
Is over that's according to an article on the Wall Street Journal that says we have reason to be optimistic and here's why.
Home prices are slowly increasing.
Sales of existing single -- homes are rising.
Housing starts are what will be known as -- new construction well those are healthier.
And homebuilding is finally finally contributing to economic growth.
-- cannon is president and chief economist -- -- in economics and an adjunct professor at the Wharton school.
And -- bad is a real estate analysts and CEO of the bad group so I know it's not even noon yet here on the East Coast but.
Can we break at this campaign Sam -- -- rating go to that bar or do we need a strong dose of reality when it comes the housing market.
I think we should take a very tempered view we know that over the course of the last couple of years the data have.
Certainly give us and give us indications of fits and starts in terms of improvements in housing markets some increases in sales volumes some.
Firming of prices.
We need to look a little bit deeper and understand that it's a very difficult to qualify for mortgage and not as limiting the capacity of young households that drive a lot of that the net new demand to actually make their way and to the housing market and to you I think a big part of this is that we've got these modest improvements in the context of -- thirty year residential mortgage rates that are at historic -- And we've that have to ask the question how sustainable are these improvements if on one hand we have a slowdown in in job growth which is critical to driving demand.
But also that we inevitably face the fact that send interest rates are gonna rise mortgages you -- get more expensive.
It's not clear that it's going to be easier to qualify for those mortgages.
And did simply that its intelligence.
It sounds if -- cautiously.
On this Wells Fargo I economists I -- bad said this even with the overall economy slowing.
The budding recovery in the housing market appears to be gradually.
Gaining momentum -- Kim actually happened anywhere the economy slows down but housing recovery.
Maybe in some economic theory but in real life no we have we have so many things that need to happen before we can have a rebound and we've had so many.
News outlets and analysts call -- bottom over the last six years and we haven't had one.
Most of the reports look at that the top ten to twenty metro areas that's not represented in what's going on nationwide.
We have more foreclosures happening this year than -- we had -- had even been predicted.
Banks are actually starting -- process up again 700000 for -- removed from last year to this year.
25% of US households are underwater on their mortgage something is gonna happen to those high -- comes most likely they're gonna hit the mark.
What did he went -- there really are ballistic reports you're looking at today are really tracks is that they are seeing more foreclosures for the month of June the one of the things that there are also seeing.
Is that there's not a fresh wave of homeowners in distress and missing payments meaning that the foreclosures that are in the process of happening -- for homes that have been distressed.
He knew for a year or more says that it.
I'm not so much there was a moratorium on foreclosures and a robo signing scandal hit the banks and so they really weren't doing anything about all those homes that were sitting there but they're starting to now.
We've also got builders -- -- saying -- it's so great we've got a 26% increase in the number of homes are building.
That is bad for the market it brings up -- brings down prices.
He held his homers are homeowners were talking about their underwater are going to be under -- even more forcing them into foreclosure or shirts at.
Like at one point -- -- your -- so is reporting up there homebuilding is operated digging but beneath the service we all see that.
You a lot of what's driving those increases is not single family homes -- multifamily rental apartments not.
Again as a strong reflection of the fact that we have and an usually large number -- disproportionate number of new households.
That are -- either because they're afraid of moving into the housing market or because they can't get those mortgages.
Right and that means rent goes to go laps to go out that that outlook does not -- -- -- say the housing bass is over and just hope for the best aghast that it was interesting piece in the Wall Street Journal -- Danny thank you for your time today thanks thank you so my yeah.