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You -- if you didn't there is video of this that we half of this stretch of queens homes that caught -- due to electrical explosions.
There it is eighty plus homes including the US congressman's home.
Were burned down now home prices how will they be affected if at all you know you never know when something like this happens what about the rebuild.
Home prices actually climbed nationwide for the fifth month in a row in August -- latest sign that the real estate sector is gaining strength this year.
But -- mass flooding and devastation inflicted by super -- sandy trigger a setback or could be a boon to builders joining us now is Karl Case.
He's from the Case Shiller Index he is a co author of that report.
Good to see a professor thanks for coming in appreciate so overall.
What do you think the effect of this storm will be on the housing market.
Well it's hard to say it takes some units out then to have to be replaced them they will be replaced I I presume.
The numbers aren't real large in terms of the at the national housing market it could wreak Havoc with our index and then in new York and New Jersey.
But we've we dealt with and hurricane Andrew back in 1972.
And we were able to get good -- is out of that -- whether it leads to an increase or decrease depends on what else happens I mean there's this movement away from home ownership because people.
Are nervous about toning is that if you're ranting and have a hurricane -- this the landlords problem not yours so it's another is sort of another.
And others -- of the of the bubble of homeownership is the rate dream because it's nightmares sometimes some cases and this is an example of it.
Okay so I'm I'm not hearing -- of real positive of these psychologically on the housing market from this storm but let's.
Really -- the picture here and look nationwide and what we saw for your August case Shiller numbers was that home prices continued to increase for the month of August.
Here's the ten -- picture and you -- not looking that bad.
An average of nine tenths of a percent higher for all of these regions that you follow.
What jumped out at you which area encouraged -- the most.
Well I believe it or not it was an all these indexes are doing the same thing at the same time.
They're they're based on repeat sales of the same property we don't want to put them in our index unless we see.
That the promised housing is ever units different and we try to price it.
You have you're looking at a bunch of things that are very different so we do is repeat sales of the same property and every -- sales of the -- has -- maintained.
You know what stands out to me is that indexes with completely different data sets in completely different areas are showing the same increase.
Roughly and then and over the last five five months.
It's really this really robust.
Can I just suggest an index of our own that we kinda look at to give us an indication of how the housing -- that's the number of housing contractors which -- come down dramatically.
Not just compared to the peak of the market in 2006 but going back to the early two thousands.
And and here we see for obviously 2006 was the height of the market.
We had 1650000.
Housing contractors now we have about 750000.
It's it's -- extraordinary less than half as many.
Our indication is that the fewer houses being built.
The the higher the price goes -- it's a supply demand issue isn't that one of the main reasons why the prices going up because so few contractors are building new houses.
Well first of all it's a huge issue you get your finger on the major connection between monetary policy in the economy if you want to stimulate the economy bring down rates and and historically housing starts have gone up every single time we've done at this time it's a headwind not a tail wind -- -- -- GDP it is it's his pen and neither the -- -- level.
The level this is below the sixty year all time low.
Which was a one month period in 1991.
When it got -- 800000.
Hits now been below that level below 800000 for 48 months.
It's now come above it as of last -- senate -- half bottle of champagne if it went above 800000 finally did.
But 800000 is it is -- literally 75%.
Reduction in the size of the industry so it until that comes back further.
I think we won't know what that that's that's the that's production each house's 25300000.
Dollars worth of new capital.
It's it's productive -- huge number of jobs.
So it's it's a terribly important sector and -- -- it's just now beginning to come back.
So until it brings out the back him -- -- -- -- -- to expect it I think they're saying you're absolutely right of people actually -- about supply and demand to by the way.
Community you have to look at the demographics they're not doing very well and and the price.
Prices or in part due to supply supply holding back.
Supply is constrained these markets in recent months and it's it's quite a surprise.
Karl case of the Case Shiller Index we thank you very much of the word that he used as robust at least across many different.
Index is not just the Case Shiller Index of thank you so -- professor appreciate it thank you.
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