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Susan Wachter, professor of real estate and finance at the Wharton School, weighs in on the road to housing recovery.
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-- -- -- rising more than expected in July compared to a year ago and my next guest says the housing market is finally coming off the bottom but it's a very long and slow recovery joining us.
-- professor at the university of Pennsylvania's Wharton school all.
Professor rocket thank you so much for joining us let's start with today's numbers because.
They looked pretty positive for housing at the same time we are still 31%.
Below that all time highs so even though it seems like we put -- a bottom we have a long way to go right.
-- very long way to go but the recovery is on.
The recovery has absolutely begun and it's going to continue and accelerate.
But.
-- at a slow pace.
Yeah no I think sitio and I wonder a lot of people have sad that there's been a fundamental shift in housing and that things that we saw maybe during this.
Previous period or generation where you know folks like my parents would buy a house.
And over time it was their nest -- it was sort of like their four -- -- you would plan on selling when you retired and that was.
You know your your retirement savings as opposed to 401K are we gonna see that kind of acceleration.
Again or are we never gonna see those that sort of upswing again.
We are -- you see it again but it's not.
Around the corner.
We have people are still on the sidelines who are choosing to rent rather than -- but that's part of pent up demand.
That's going to play out for in the recovery is just not gonna play out immediately because there's still have.
Folks waiting 1% it sounds great but it's still not.
For many as signal that this market is so expanding that they better get in now but you know with interest rates as low as they are this is.
Quite an historic time for the housing market in terms of overall cost on the other side if you don't have pristine credit.
That's the barrier as well but over the next ten years or so what do you think is a realistic year over year increase to expect.
In the price of your home because you know there was a tiny could see 1020%.
You -- -- into -- house for five years in.
More than double your money do you think we'll ever see back kind of dramatic -- again.
But that kind of dramatic gain is it was unsustainable and will probably not going to see -- for awhile but you know.
Housing has been a stable investment meaning that housing prices have actually historically.
Kept pace with inflation and that's about debt.
I expect actually that housing prices and rents going forward will more than keep pace with inflation.
But -- we're not there yet we have to get through this recovery period where we have still shadow supply.
Where we don't have a construct -- industry so there is still.
Quite -- rocky road to get through to back to normal so there is it and what do you think could have.
And from here to make things better I mean you talk about low interest rates I wonder if maybe.
Interest rates have to go back up in order to get people back into the market those renters being talk about sitting on the sidelines maybe they have to figure feel like this historic window of cheap this is closing.
But there's a point there you've made of a good -- -- I think if that starts happening you will see a rush to homeownership now.
And but there's another -- well which is the credit constraints banks.
Very very conservative their evening as we speak.
And but it's difficult to get in with -- with average credit scores are right now that is the barriers well and we don't want that he's too much because that's how we got into the situation in the first place is -- absolutely thank you so much for coming on the it was a good.
