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FTN Financial Chief Economist Christopher Low on the outlook for the housing market.
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Outlook for the housing market housing starts in February falling while building permits are -- I training is -- an extensive data Chris low chief economist at FTN financial live in in person Chris thanks for joining us instigated this afternoon.
What's a quick take with the housing numbers today.
Well I think the biggest thing was the split between single multifamily single family starts were way down almost 10% nine point 9% drop there are double digit gain.
In multifamily.
I expect that is well we've seen it it's not the first month and it's a trend that's going to continue.
Because it's all about -- told that up so people are buying multifamily houses hoping to rent some of them out.
Particularly in the urban areas right well that's right you know one of the really interesting things is people are starting to think maybe I don't want -- own a home may be a wanna rent is people don't -- where they would buy.
They they want to live in neighborhoods where they have access to restaurants and shopping and transportation.
And he you know when they kids grow up well lol will worry about that when that happens but for now we'll stay in the cities and so.
We have this glut of single family houses in the suburbs nobody wants around them.
They -- -- a city so the multifamily stuff -- big from an investor's point of view that's good to.
Because it means some of those reits are actually making money starting projects doing things.
Even though there's still a glut of single family home.
All right so what about just as fed -- -- if you're making that decision rent vs buy.
Where -- rents going and where home prices going.
Rents are going up home prices are still going down and I -- well we expect that's going to continue for a while the Fed.
They -- he about a million foreclosed homes are going to hit the market this year another million next year that's why we don't need to start new ones.
-- fact that prices are still dropping tells you there's still way too much supply out there however.
We we have a new initiative FHFA just announced in the last month -- -- going to be selling in bulk.
To investors.
To start to try to rent some of these single family homes this well -- -- -- -- people signing up to do it.
And and we should know in six to nine months whether this is.
Getting any traction if it guys that has helped so much of this revolves around the rental market are that you mentioned reached before by the way any needs it's somebody wants to get into -- REIT that just focuses.
I'm multifamily houses how do you do that how do you look for replied I I can't talk about particular names because I'm the -- how can you find quite.
Well -- what what I would do is if you have.
A particular source that you like to look at for stock information I would go there and start by looking for once that are residential.
Multifamily.
And and Begin there and sort of narrow it down and -- and I would particularly look at cities like New York Washington Boston Miami.
Which are vibrant and what where rents are rising the fastest.
When you.
People who say are are owning a home in its declining in value in so many of us look at our homes as equity investment going forward to toward our retirement.
Are you starting to -- -- since the housing crisis is many years in -- that people.
Are just.
Really struggling there that those home values are just falling out and there's no upside we don't see light at the end of the -- that's been getting for your from our conversation here.
Talking about that that's exactly right.
On average house prices are down twenty to 30%.
-- in.
Well since the peak in 07 and they are still falling.
Thankfully only -- -- two to 3% rate now not the double digits we -- to see but still falling.
50% of households that use their retirement savings it is all in the house.
And then -- and according to fed -- search its middle class savers who've really been crushed because if you think about that the poor don't own analysis.
And the rich have other investments and so that leads the middle.
They've taken a tremendous hit.
And what when I look at labor force participation Dana what we're seeing is that a lot of people -- working past the age of 65.
And I think it -- a lot to do with the fact that they were gonna sell that house in Minnesota.
Or in Chicago and move down to Phoenix and now that's just hope -- Alan Greenspan used to say that houses were the ATM's of the future not so right now no that's exactly right so -- it has had a pretty profound.
Impact on on the demographic trends.
In labor and that's one of the reasons young people can't find jobs.
Chris low wish we had a brighter outlook for me today -- an interesting conversation didn't -- Get better if it honestly will get better is just gonna take another couple years light at the end of the tunnel but it's a very long tunnel for slow thing.
