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Henry Cisneros on the American Dream of Home Ownership

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    Former Housing Secretary Henry Cisneros on the outlook for the housing market.

  • Duration 4:03
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So who says the housing market isn't recovering last quarter one in four homes sold were foreclosures so -- real estate ever get back on track joining me now is Henry Cisneros he is the former.

Secretary he's the executive chairman of Citi -- -- take much for joining us first -- Melissa congratulations on the first week of any show -- you so much.

So.

Back to the topic hand of renting vs buying.

-- -- dreams alive of owning a house do you think after everything that has happened.

And I think it absolutely is most Americans eventually want to own -- home.

But I think the next few years are going to be very good for.

-- multifamily for apartments because we have people who are graduating from college and trying to get into the workplace we have people coming out of their parents homes.

After college.

For the last few years we've had an impressive -- number of of young people in their parents homes.

We have an immigrant population that needs a place -- the live and it can't be homeowners now given the pert present circumstances of credit.

And down payments.

And and worst of all we have very little apartment stock that's been built in recent years so there's pressure on.

Apartments which means -- need to build more.

And prices will rise for rent so as a business proposition yeah apartments make a lot of sense.

But I knew what difference does it make whether you rent -- buying any longer -- -- the thought was always.

You bought you held onto it for thirty years you build equity was sort of like having a 401 -- that you had some sort of retirement savings in there at some point.

You could sell it get the money back out -- and that was sort of your retirement now.

It seems like housing values may not go up the way that they used -- well it's I think I'm just -- is who -- I think housing prices will be going back up so the economic rationale still makes cents.

But more importantly -- the economic rationales of place that people want to have a home that they own and we know there's many benefits.

In the form of stability for children.

Role in the community -- -- -- a come from owning a home now.

The big argument against owning these days -- a fact of the society is so mobile and people have to be able to pick up and leave and you can't do that.

If you're stuck in a home it's been one of the reasons people have had difficulty moving to a new job.

In a different city is because they're under water in the home where they are so there's a lot of ebb and flow and decisions back and forth but I think in the final analysis.

People may read in the short run and for some -- -- may may make cents down mobile for as long as they can but for the majority of Americans.

They still want to own a home -- -- for the long haul for their families good.

I I've looked at economic data -- -- certain places like China you know they spend 10% of their income on housing and like 50% on education and on training.

You -- for their children -- here we do sort of the opposite we prioritize and spend a lot of cases 50% of our income.

On housing -- and much less on education.

-- we have it backwards.

Well the guideline here is 30% for years and years the -- -- has been.

About 30% for shelter and you're right we've -- out of my about -- why why is that ideal.

Thirty -- -- -- -- -- but it's about it's about it's about what goes you know the family budget ought to be spent that leaves you money then.

For transportation medicine children's clothing entertainment.

All of the other things that we require food that we require in life.

So that's come of that for years that's been the though that the kind of the tipping point it's gotten out of balance as housing prices rose people were spending as you say.

50% of their income for shelter and that is too high.

But I I think it it we're we hold it down around 30% or so that makes cents.

And end and frankly Americans -- the best house people in the world the quality of housing.

The volume of house and we have more square footage per person.

And an an and that's been a priority for Americans to live in a safe and decent place -- Henry Cisneros thanks so much for joining us we appreciate it.

Thank you Melissa good luck with the show they TO.

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