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Housing on the Rebound, But How Solid is Recovery?

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    FBN’s real-estate experts discuss the current trends in the housing market.

  • Duration 8:36
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We start -- break taking a pulse of the US real estate market here on money Fox Business.

Has been reporting on it all day long and the good news mortgage applications rose by one point 8% in January from December.

That is the highest level in eighteen -- so how solid is the real estate recovery.

With me is are all.

Look at this Madison Hillenbrand is a -- -- -- super agent from the hit show million dollar listing LA.

Bruce -- is founder and chairman of the continuing company Dottie Herman is president and CEO Douglas element.

And Jeff Levine is chairman of Douglas didn't development welcome to all of the year -- I'm bursts let's start with -- is real Steve really back because we have been burned maybe.

It is back in a very big way to condominium market in the major.

-- environments is on fire.

Real and study you agree with that and we expect the real estate -- gonna come -- and say.

Yeah real thing is backed by by by effort but war but -- Me a convincing way sell it back it back in New York a year and a half ago but his back across the country.

And it's -- there's actually a shortage of inventories say you have to buy and buy it -- Really -- that's good sales pitch Madison -- -- out in LA things are just flying off the lot there it's gonna say shall be you know a lot of houses on the shouts of the is flying right off.

-- -- flying off the coast he asked them right off the coast are flying in the market.

Has taken off exciting this year so far we have a big sales -- five million dollars in Malibu.

Out of the foreign buyers so it's it's taken off to a good start.

Yeah that's ridiculous OK Jeff let me ask you yeah.

You know what I look a lot of that would.

Would be markets that are on fire right now it really concerns because it looks like all the same problems that we saw last time around for example.

One of -- one of the marks that you think is going to do the best -- be next.

I know zillow is projecting their prices and fetus could go eight point 5% next year that it's been nervous.

Well it should make you nervous with the reality is.

That the Phoenix market was in the midst of a boom when the recession arrived as a result of that it's suffered most greatly all those people were involved in the industry.

Of creating real -- selling real estate finance human Allstate all lost their jobs.

And growth stopped.

Now that the market is corrected to the levels that existed prior to the boom going back almost 2000.

You can buy homes in Phoenix and greater Phoenix area now.

And you correct office space in the greatest and -- what's changed what's different this try to figure out how to yet.

Well I think if you buying at these low prices if you anticipate with these low mortgage rates that eventually.

You're going to see interest rates move up with the creation of the money the way it's going on.

That you'll see.

Appreciation.

In the form of interest driven inflation so I think.

Contrary to what some other people and saying -- and housing now makes great sense.

It debt it makes sense Bruce let me ask you one of the markets that you pick as one of the best buys right now is tapered Cisco that is another market that zillow says is gonna go up seven point 3%.

-- 2013 I mean that kind of price appreciation in one year.

I at it I mean it sounds dangerous why is it not dangerous well.

It's not a question of it being dangerous and not being dangerous the fact of the matter is San Francisco and New York.

Are the two cities in the United States of America to have the greatest barrier to entry.

-- demanded for housing far exceeds the ability of the marketplace to produce that housing.

So the appreciation is really based upon.

Did the in balance between sept.

-- -- -- Dotty -- any mention New York as well but still we think it's gonna go up half a percent next year in New York I think it's one of the worst places to buy right now well you can't believe zillow I -- you know yeah yeah really out there.

I have I if you if you look at what people -- about housing they said that it.

Nobody would buy houses anymore and it was over do you think prices in New York early going up -- a precise in New York City and when they take New York they take you have stated to have an effect.

New York City.

We are back to move the prices that we of that at the below we're -- 98%.

Of the value of the home.

Homes that affordable still has anything changed financing much -- so you have to have a lot more money in order guests and very very good credit.

Madison what do you.

Think about I mean what has changed because LA is an area you know I have a lot of friends that got very heard out there that bought their first -- -- they -- prices collapsed -- underwater.

Mean it's hard to believe -- saying LA is gonna go up seven point 3%.

In the next year.

I don't know -- -- across the orderly you know really high end places in the and that you know the valley is still sort of in the doldrums.

Well you know I think the biggest change that we've seen are here in Los Angeles politically speaking and I think -- it speaks for the country as well that attitude.

More than anything has really shifted and people think that buying real estate is now a good investments tangible he can rented out if you get into a -- Prices have really declined to a point where people that are in the ability to afford -- purchasing get the loans are doing that and investors have entered the market again so they're really driving that the market and people are fighting for that little inventory that we have.

I would ask each -- you what is the biggest mistake or misconception you've seen someone do or may course say in the past little bit Jeff let me start with you what's the biggest -- -- -- -- -- As a developer you have to pick your spots very intelligent for instance the recovery that we're seeing in New York after we went down about 20% in the recession.

In eleven and twelve we retrace that we're exceeding and now.

They're -- area.

With the demographics of young people.

Whether it's in the Chelsea area -- -- Williamsburg Brooklyn area -- young people are choosing to live because the price point is much more affordable it's a prime Manhattan real estate.

And all of a sudden still carries -- booming so you have to.

No the demographics know who is -- and what areas for instance if you go to the suburbs in New York -- in Phoenix.

The middle range homes have not recovered as have the commodity homes nor the luxury homes -- actually have to -- -- Lots -- what's the biggest mistake exchange someone make -- -- here.

Well I think the biggest mistake people have made this is that they they follow the -- us.

And to -- lose -- -- and the news legs -- Dahlia.

Now it's not that -- -- -- it's the fact of the matter is that three things are true one there's not much inventory.

To price -- -- for rentals are written record highs and three.

Interest rates already priced at lowest that they've never been before so the fact of the matter is.

If you couldn't qualify for credit and I mean instead of being afraid of what zillow says will be -- -- case says.

You need to be intelligent and thoughtful about it.

This is probably as good an opportunity.

To buy because the markets have corrected themselves hand and if you're -- rent you're gonna pay at a premium.

And whenever it and when the news turns around and starts writing articles about.

It's on late.

It's too late at that point dot what's the biggest mistake it -- when making a pass on a bit here.

Well that's exactly -- I mean they read a lot of stuff do you -- how mark.

Okay look at your individual market people at rightly points write reports OK and as they said people that -- -- -- didn't.

And look at the interest rates are about three and a half percent a year from now to use some now.

Okay they're going to be a lot higher so you know you're gonna have inflation and so that's.

And that's what's the biggest mistake or misconception you've seen out there recently.

And you don't buy -- down eleven that was a mistake it was okay.

Aren't really went before we go that I also read that if you -- on Friday vs Sunday.

It means that you could end up selling the house for 5000 dollars more to an average of like 1% -- -- about 5000 on a half billion dollar numbers is that true why would that be.

I have no idea a great -- I don't doctor.

Hello it's is sounds good it sounds good all right so we'll throw that up I would now.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- That they sell faster people are home for the weekend and they're searching and they see the new inventory and therefore they come and they buy.

The house faster.

End -- -- -- you -- -- okay potentially more money does not do price adjustment we'll see our guys thank.

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