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Corelogic CEO Mark Fleming and Clear Capital Director of Research & Analytics Alex Villacorta on the impact of the fiscal cliff on the recovery of...
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The looming fiscal -- has many American taxpayers up -- arms.
Tax Policy Center warning nearly 90% of Americans -- pay higher taxes if congress doesn't get its act together.
But now there are growing concerns the fiscal clip will also end up to you -- our nation's struggling housing recovery and Alex -- acorda is director of research and analytics for clear capital -- mark Fleming its -- watch its chief economist.
Thanks so much for guys for coming on tonight I can't imagine a better panel on this topic.
Allison wanna start with -- your report.
You say it's a looming fiscal clip that is the biggest danger to the housing market house so.
The key -- there is just all about confidence and -- primarily confidence for the consumer.
It's no secret that the housing market's been on -- roller coaster ride for the last six years and only until recently the starting point twelve.
Have we seen -- housing market start to really come back.
Primarily driven by investors and the stability this growth is -- for the broader consumer class cent to feel better about themselves -- jump in the market.
With the looming fiscal fiscal cliff on the horizon.
There's a big risk that a lot of folks will just throw up their hands and and and say you know I -- Elway told next year this is the biggest risk that we see in the housing market is sustaining this confidence.
And that's according to the broader class of home buyers out there to keep the recovery going.
Mark do you agree -- and B.
You know -- -- starting to see and according to your very own numbers that a turnaround certainly in the worst hit markets here.
I mean there's a danger that people will will just stay away because they're depressed about the marketplace and miss the rally.
I think -- we definitely see our house prices are coming off the bottom quickly I'm in Las Vegas today and Las Vegas is one of the fastest growing markets.
Even though it has.
The highest negative equity share.
Almost half of all home sales are distressed sale Syria house prices are grown by 9% wow common so there's that there's big gains being made in many of the hardest hit markets today.
Nationally were up four point 6%.
I would agree that you know the concept of confidence and people's.
If they people who if you lose confidence then they would be less likely to buy a home and that would dampen demand and potentially put downside -- to house prices.
But it doesn't necessarily mean it would go down.
And we also to look at what is the real likelihood that we would actually go over the fiscal cliff because as Alex said everyone recognizes -- the importance of it.
And you know -- what's the like that now.
While sleeping pills are under those people in congress are slow learners I don't know if you can you mentioned that that I would mention some numbers that I found really compelling from -- capital in this.
Either major metro markets and what's happening what's going to happen to their prices as of forecasts.
Look at Seattle.
They're expected the ups -- prices they -- up 10% over the next six months.
Phoenix Scottsdale.
Ten point seven Vegas she just said nine point 5% San Francisco.
This is to me I get it Alex and -- such great news to see these markets coming off their bottom.
Is there any thing besides the looming fiscal crisis here that might -- -- it another recession a lot of economists are talking about it.
Yeah no certainly I think there's several factors that could derail.
Budding recovery.
Certainly in the fiscal -- could just be one part of the story out -- -- thirteen would be.
You know -- written back to recessionary environment.
Now -- that happens and unemployment starts creep back up again and then we have more structural problems that go well beyond just housing.
That we'll certainly need be addressed.
But you're right those those gains that we're seeing and projecting for the first half of the first through the first quarter 2013.
Need to be taken a little bit of context it is great news and certainly.
Going up is better than going down but.
The key here is that a lot of these markets he listed the Phoenix the Miami the Tucson how the Las Vegas all of these markets were severely hit during the downtrend.
You know such that is these double digit growth that we're protecting our off of record low price are and hand in nine home values.
You know affordability likes I'm so I was Martin alsop -- -- a great thank you there.
Long run -- -- and directed -- -- the right direction -- turn to you for his economic.
You that you say that home prices are up four point 6% a year over year you're looking for more gains and but -- -- the question it keeps coming to mind is just how fragile is this recovery in the housing market you would think.
Given the particulars given the prices -- interest rates given supply that people would be all over this marketplace it's not happening.
Isn't a fragile recovery.
I'm actually don't think it's a fragile we're -- you know where -- -- the month supply nationally is six which is right and right where those sweet spot is fair a good healthy market may you know markets that we've been talking about -- couple minutes.
Are much below six.
And it really comes down to existing homeowners.
Make up the vast majority of home buyers and in these markets that were hardest hit they've they're locked out by negative equity the so they don't participate on the supply side of the market.
Nor -- they participate on the demand side and that's why we see.
This -- paradox of negative equity is that is constraining these markets increasing -- tight balance and well I think it was a good thing because prices are -- rebounding.
Well Alex I really -- pick up on as a small fact firm from your.
-- that I found in -- said what's missing is the middle market what do you mean by that quickly they don't have a lot of time.
Well this short answer is this recovered to date in those mark -- talking about having coming from investors and eventually that money will dry out as those -- shrink.
So for the future of the recovery to continue we really need the more traditional buyers those those homeowners in negative equity come back on line.
And only once that what that happens will that the strength of the recovery really takeoff.
Well -- mark great job thanks for coming on tonight really appreciate your time.
Thank you thank you --
