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George Mason University professor of finance Anthony Sanders weighs in on the state of housing recovery.
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Help you existing home sales -- -- this is big jumping seven point 8% in August that's the highest level in more than two years.
Mortgage rates do remain near record lows but building permits fell to 803000.
Down from a four year high in July -- We also learn construction of new homes rose but only by 2.3 percent in August coming in below expectations median prices were also down I mean it's a laundry -- decided they wanted us so what is a homeowner to make -- -- -- -- where are we really in this housing recovery let's bring in Anthony Sanders a finance professor George Mason university and his expertise sir thanks for joining us once again.
I -- on the record saying housing recovery has some legs so are we limping walking or running to recovery -- I was there were so one thing and that -- -- existing home sales are now back to about levels we saw -- 1998.
Which means we're going back to the pre Clinton big push.
Or the giant leap forward and and homeownership.
And so we're so -- -- that we're starting to get there it's slow and this may be -- summer recovery only.
Pretty good record low mortgage rates are encouraging people to go out buy homes or in a way.
By saying that they're gonna be low indefinitely through 2015 is that having effective getting people but maybe push off their home -- they don't feel pressure that interest rates are going up.
I would go to latter argument I think that when the -- signal that they're gonna do QE turn and he.
And as -- there are forty billion of MM BS as long as they have to.
This is what's the rush -- aren't going up anytime soon and you know right now though again credit is still very tight.
And banks are still wanting to amend.
Very nervous about making mortgage loans keeping on the books -- the got to solve the Freddie and Fannie were the FHA insurance.
And it.
That means not a lot of mortgage applications those fell 4% I think this week from.
So what -- that mean in terms up I think you're expected it that's sure eternity -- -- eternity to infinity and beyond their previous -- that the Brett.
Okay tight credit plus low mortgage rates keeps seeing just people piling up -- needs fixing them all products bubble you think -- now.
Well I think what's gonna happen is is that you're gonna get a jam up on the buyer's side because once again applications are down -- -- no credit.
This made you know it kind of create another wave of replies through the fourteen government programs which is probably one of the -- what Bernanke did this.
But again beyond that other than refinancing America's households.
I just don't see where this is gonna really help.
Enough -- -- bill -- as I said we just got back to where we started that when Clinton unleashed.
The national.
Of homeownership strategy honest and notably capital gains tax and housing we -- bubble blow up -- almost took -- -- under.
Now the Fed is saying oh we can't just go back to 1996789.
Now we -- we have for reasons we have do bubble again.
They will not be able to create a housing bubble until Freddie and Fannie loosen their standards or the banks start making loans on the wrong books.
And then we're not saying that.
Yes it -- there's there -- some people think there's been a real fundamental shift in housing that will never received a price inflation.
You know that we have seen in the past and housing won't be the same type of investment at least you know.
In our lifetimes maybe our kids like times we won't see that seeing kind of push higher do you think there's been a real fundamental change.
Oh absolutely I.
Think if we go back to the late 1990s we had Franklin Raines -- remember him with CEO Fannie Mae.
Actually at a video release touting sort of all the advantages homeownership housing only goes up right well I mainly.
They took that video Lothian Nat gas but you say there's no risk to let them out -- -- back -- was going what that -- -- -- anyway.
So again I think Americans no longer buy that poppycock let me.
Final analysis you and to implement such laughed since that happened in -- but I want to talk with a median price.
Going down for a second month that was -- hue agree for an overall gain in house prices this year.
Prices anybody -- last year right.
I think we'll see you and a year over year increase in prices.
But as Frank Sinatra sang in the summer when this is -- summer -- that everything's improving in the summer Brazil those numbers came out for August and they're down.
Month over month.
So your -- -- but we're -- what we're starting to going to the slow season again which is the fall winter months and that's -- -- Nothing that's normal that's -- and we're returning to 1997.
Normal.
OK which is good news Anthony Sanders pleasure seeing thank -- --
