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Resource Real Estate EVP Kevin Finkel and Trulia.com chief economist Jed Kolko discuss the housing market.
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-- -- We'll debate this let the better plan to fix housing President Obama are Mitt Romney -- also got Kevin Finkel resource real.
Executive VP and Trulia dot com's chief economist which had Kaloko.
-- let's start with just a big -- -- picture you say almost every indicator shows that housing is up is the recovery here.
That's right we've seen prices up in most markets in the country.
Construction even though it's far from normal levels is still much better than where was at the worst point of the crisis.
And most importantly vacancies and inventories have both come down a lot.
That's important because it means they're fewer vacant home right -- down on prices and helping -- recovery rate that's a big change what we talked to three years ago -- Kevin -- all so happy days are here again do you second that emotion.
Yeah well I I agree with the jet I think that we are seeing some stabilization.
However I think that's a far cry from actually seeing a recovery.
Which usually implies -- we're gonna see home home prices going up.
And I think that's still a ways off and I believe that for a couple reasons one is.
We can Casey very anemic job growth United States we have about 15% of the population it's either unemployed or underemployed.
And until you get that change and to get people back to work.
It's very hard to foresee a future where you're gonna see home prices rising incomes are rising OK second problem -- is is the overhang of supply.
There are about one point five million units of foreclosed homes on the balance sheets of banks that are gonna have to come off.
That's a big problem that we talk about prices -- starting Mubarak and and home you know that's gonna -- -- eventually OK Kevin thank you for that buzz kill but -- -- Kevin nonetheless despite the -- housing market you think we can afford to eliminate the tax deduction for mortgage interest payments would back.
-- -- You know if it might -- house seeing in the short run if it's not dine out over time and I don't think -- Versace's out that it never happens suddenly but it's politics and who knows.
But the problem with that the mortgage interest deduction is really two fold one is it causes people.
To buy large houses and put a lot of debt on those houses they can take advantage of the tax break which of course is a very regressive tax break break.
And the second problem I actually this is the bigger long term problem.
Is it causes a big government and sent people to high single family homes which made sense forty years ago when people stayed in one home.
For many years -- -- one job.
For many years as well trade we see did the job market's much more dynamic union labor is it -- move around from city to city and rental housing apartment specifically.
Are much better place for the government to be in -- people their lives so they can have that mobile labor and yet we can't possibly eliminate mortgage interest -- can't wait because.
Housing has been at the center of our economic -- that.
Well nobody suggesting that we eliminate the entire mortgage interest deduction to -- Of course that would have a negative effect on housing prices and even if longer term it makes sense to think about a different type.
Of interest adoption or.
A reform of the mortgage deduction nobody suggesting eliminating it today.
If you -- to keep in mind why we're talking about the mortgage interest deduction in the first place.
The there is a bipartisan agreement about cutting back on tax -- in fact that's that's one of the only areas of possible have to -- where there is bipartisan agreement.
Republicans tend to like reducing deductions because that allows for lower rates on a wider base which improved economic efficiency.
And those tax deductions benefit higher income tax filers more than lower income tax filers which a big reason why.
The left likes the idea of lowering deductions at least for the very rich that's why we're talking about -- deductions in the first place.
Roughly go half of the value of itemized deductions are housing related certainly -- mortgage interest deduction but also on tonight.
Things in the entire country right let let let's would expect it -- to Kevin Kevin politically.
No one's gonna touch that interest rate deduction on mortgage are -- Well look I don't know -- clearly there RE a lot of very interest in very.
Powerful political organizations including the national associations -- real -- realtors are gonna fight tooth and nail to keep it.
But.
Compromise is gonna have to calm if we're gonna get past the fiscal -- and gets a real budget reform.
And this is a hundred billion dollar item that's a lot of money even in Washington up a lot of money.
So I believe we hear the left talking about this year this issue.
And the right talking about this this issue that probably.
Speaks of the future look at the there's something in the -- and so why wouldn't I wouldn't -- for guess I don't know I never -- -- politics but it feels like there's something there OK -- appreciate -- being with us Kevin --
