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Hovnanian CEO: We’ve Passed the Bottom of Housing Market

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    Hovnanian Enterprises CEO Ara Hovnanian on the outlook for real estate.

  • Duration 5:46
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I knew all the sales we just mentioned -- the data coming out today showing a three point 6% increase from June.

About 7000 higher than analysts expected so could the market -- finally bottomed out.

And how many times have we ask that question a lot.

I'm -- but is it true joining us now -- a Fox Business exclusive.

Lokhmanian chairman and CEO of Hovnanian Enterprises.

And you have been with us as we launch the network and justice we started to see the housing market imploded.

And now the question becomes the Davis actually starting to look a little bit better moment by moment do you see a bottom or have we pass -- -- -- Think we're past the bottom I mean the market really started turning for a few quarters ago.

And this is just reinforced.

The fact that we're there it's beginning in a big way -- -- a -- of people are focusing on the fact that it's up 3% new home sales over the prior month -- up 25%.

Over the same month last year.

Then it's -- month after month positive results all the public homebuilders are announcing it it's it's happening -- stock is is up as well so your benefiting from all of us but I have to ask about the legacy of what we've been -- -- -- -- -- Which is that first home buyers have been soaring right there there it's always tough to buy your first home theater you know you're you're getting yeah has figure -- becomes paralyzed would you try to sign that check it seems an impossible -- takes a leap of faith.

And in these times that leap of faith is even harder.

Do we have -- a -- young generation now what people that are so afraid of buying their first home that they're gonna be renters for life.

I don't think so -- that certainly was a lot of speculation.

But the survey after survey including those done by some that were sceptical are showing that renters do want to -- that dream hasn't changed.

Qualifications for the first time homebuyers are challenging but as soon as they can qualify that they are out in the.

That's what I wanted to ask you let's say you have open house time and -- Hovnanian home brand new is being shown somebody walks and it says.

I'm ready I have 20/20 5% down payment for it obviously its evident that more of a Jumbo loan I'm sure.

And are you see you -- get loans or are they being turned down today look at it.

It really is The -- world that you have to break -- -- different components those with very clean credit.

There is more than ample to find that -- the score was 700 pluses and no problem.

If you're in the mid six -- which for decades was.

Very good credit you could qualify for a mortgage you -- and UB creditworthy.

But after the hold.

The sub -- sub prime problem.

They are having problems getting mortgages today -- so it's if you have a little blemish it's a little more challenging interestingly.

It's not the first time that you would think the first time by that you would think would be fueling the market.

It's those that are buying some larger homes and -- because rates are so low they're up to step three point 7% the monthly payments are so low.

That a lot of buyers have enough right now and a lot of investors are coming and that the number the amount of people buying in cash it's usually an amount amount of people.

Buying houses and and multifamily dwellings for rental.

Has also increased tremendously -- you guys you guys are to retirement communities as well we weren't good collective adult you know there's some of those committees are -- they are on the rise as well -- they're pretty much moving as the market's moving the investors have been more focused on the foreclosure resale market.

Not as much in the new home market were seen primarily.

Owner occupied buyers active adult -- the near term firmly below or something because they're not retire there weren't hazard especially in their late fifties and working.

Your name is on the the plate it's on the shingle I mean -- at some point this stock was below a dollar you have come fighting back.

At your darkest moment during the some private implosion and -- the real problems there did you ever think to yourself I can't sustain -- -- mean it's great to see you coming back.

You know I'm home builder -- eternal optimist so we're always thinking that it's gonna get better -- -- my father started my late father for service business over fifteen years ago we've been through a lot of cycles good bad this is clearly -- usually but.

We've been through it we know we have to do.

But the good news is the bad news about a cycle is when you go down it's not fund.

The good news is when it after goes out of goes up and we aren't helped what is the primary signal that you need right now to to really put John interject not just bottoming out.

But really taking off well what we announced last quarter our sales were up 52%.

-- half that's huge.

Gross margins increased pricing is going up we're hearing that from public builder after public builder were releasing in ten days I think.

The market we'll hear more of the same when you would -- you have to -- Do this tap dance with institutional investors of the largest holders of your stock are they believing that are they listening -- up okay we're sticking with.

-- and I think video are feeling very good we just had -- -- -- Blackstone.

Make a major investment with us.

Do create a hundred million dollar land bank fund -- and -- equity as well.

That was just last month so you know we're absolutely seeing that I got ads are pressing on this point is that he get an answer if for example interest rates were to go up significantly -- -- full percentage which is not gonna happen but anyway -- is that what you fear most.

You know -- to be honest what -- really fear right now is the market improves too quickly which would make construction.

More challenging a lot of people left the industry.

And pricing would be under pressure are pricing -- are crowding out worry about that more than the likelihood of higher interest rates it and the further slowdown what we love getting updates from you please come back that it.

Ara Hovnanian is the CEO of -- --

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