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Morgan Brennan, Forbes writer, on whether falling off the fiscal cliff would hurt a potential housing comeback.
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The one bright spot in the economy so flaw I think you could say is the housing market.
Pending home sales out to the top of the hour a gain of one point 7% pretty healthy.
New home sales -- -- news yesterday -- over 4%.
Joining us now is more than veteran staff writer at Forbes magazine.
Let's suppose welcome the -- thank you agree -- -- I'm sure that housing is a bright spot apparently and you've got some growth that I got some recovery but yes now deposit this we go over the fiscal -- -- we go full scale -- flat tax increases and spending cuts you know and we got it.
Does that -- housing into -- of us.
I I don't -- hit -- home -- images that we -- you know several years ago but I do think this will create prolonged bounce along a bottom.
I do you think he could see some downward pressure on prices.
I think we see some -- tax cuts that are going to expire at mortgage forgiveness debt relief act -- -- -- -- I'm worried about more so than mortgage.
Interest deduction did expire in -- a lot more people walk away from their homes rather than go -- short sale process distressed housing is still about 40% of all sales right now.
He -- market walk away more for closures downward pressure on prices I think I think we've got -- Larry.
Whether the yeah yeah yeah that -- -- very straight answer I think what happens of ago with a fiscal cliff got housing go into reverse -- basically yes it does.
Does not not to -- not so dramatic dramatically as you know what I do think.
Robert Shiller Yale economist was right when he said that we could see some you know some weakness in housing report Sheila as in case -- yes -- say watch out is about last week and and I think he's right to say that.
Let's suppose we don't go all the way over the -- What we get is a tax increase on the so called rich forget about spending cuts and ignore the debt I mean a very small scale deal of focus is on taxing the rich.
What happens to housing them.
I think that's a very passionate.
I think I actually think this is interesting we've -- part of you mentioned pending home sales and new home sales I think what we've essentially been seeing -- a little bit of a fire sale.
I think especially the low and Wear short -- a concern and it's very high -- -- luxury home sales are concerned.
I think we -- a lot of sellers who are incentivizing selling their homes where the and Pearson gets slammed with us tax says oh OK so that does is goes to sell -- -- like simulate all of this out to sell in this fourth quarter I think currency that -- to -- sluggish next year.
I also think that all this uncertainty -- over the -- or not I think -- gonna continue to see tight lending standards despite a loan mortgage interest rates I think that's gonna happen.
That isn't that the counterargument Ben Bernanke keeps on printing money is gonna buy 45 billion dollars with mortgages every month.
He breaks down on what 3.5.
Percent something like that surely that continues surely that's still a bright spot.
And you know if that happens and we still have that weak dollar gonna continue to seek foreign buyers coming into the market -- -- -- -- You mentioned the luxury homes.
-- selling well.
Multimillion dollar -- they are selling well and I didn't -- an article -- the that -- zone lots of articles on that yet we've definitely I you know this housing recovery.
I throw the that high and doing really well that's it with billionaires -- -- parents about the stock market plowing money into real but it is the -- -- a -- this and foreigners are buying a lot of stuff to let you know you can -- that.
Worst lots Russians actually we've also been seeing a lot of Argentines live venezuelans.
We've seen a lot of middle easterners -- -- a lot of Koreans are coming into the market now Chinese basically everybody Canadians telling my.
-- -- -- -- ask you this this recovery but a -- -- -- yeah strong yet not yet inventories and very small levels here these are professionals in many cases who are buying so.
-- of the day any wit.
A net of negativity the stock market sells off because -- -- -- at semi deal something of the deal and it's not gonna be helpful here because a lot of the buyers here are pro.
IA a 100% agree with that and I think if you just look at the consumer confidence numbers that came out -- -- you know earlier this week.
I think we will starts electrical -- and.
I'm Morgan out what works better the Federal Reserve you know keeping rates low by -- Ben Bernanke is Republican that's reminder -- but also well.
It -- does it that or is that the president and the administration accounts as housing programs we -- a 160.
What works better.
-- -- I have yeah I mean yeah I think I think if he really if you look at housing and what's happened in the last couple of years.
You know we saw the so called double dip without a double dip because the government got involved -- the first time home buyer tax credit I think that belongs.
Art art trip down to the bottom CFA -- -- I I think it doesn't work.
But I -- that I see that given I say that this year some the government programs you've seen had actually done some good.
But it's taken five years to get all -- Let's at a time -- you have destroyed my argument that a single family home and agree they were the best investment you can make right I actually do you think I do you still think it is a part a long term.
I investment yes yes you're looking to buy -- Selena cheapest that's that's it.
At the -- Brennan good stuff thanks so much for joining us coming insignificant -- thank you we are indeed one of the most in fact the most charitable nation in the world.
