Peebles: Not Worried About a Housing Bubble
The Peebles Corporation CEO Don Peebles on the state of the housing market.
- Duration 7:06
- Date Feb 8, 2013
The Peebles Corporation CEO Don Peebles on the state of the housing market.
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Welcome back -- -- -- the really big topic on Fox Business all day today.
Home prices are rising dumping more than.
In the past year and now people are worrying whether or not looking -- and another house.
On this very show Ronald Reagan's former budget director David Stockman saying he's one of them.
It's the same -- money printing by the Fed when you drive the interest rate to zero you're just encouraging the fast money.
To chase the next bubble this is just easy money.
Chasing prices for a short.
You know short time and now we're gonna be back in the -- -- let's kick.
-- people's he's here now.
And whether he is worried about another housing bubbles are you worried.
Not at all and I think stockman is missing one important point that is.
Many of these bars and markets like.
Miami did have bounced back.
New York City -- cash bars in the global buyers and they're not borrowing money and so.
The impact of the Fed keeping rates down doesn't have any impact on -- Brazilian buyer in Miami.
We're but what you know the fears is that these are good that you went after cash fires are not the first time buyer there that person is still a wall.
Meaning that the cash fire saying hey the Fed is inflating possibly fleeting with these easy money policies you know assets like.
Houses so shouldn't in buyers is just be will just be scared be whereabouts to be cautious about that.
Because some these markets may be in a bubble because we got people coming in cherry picking for closures and the like.
-- you know I think some markets that are not healthy where the overall economy.
Is not doing very well below the market that you need to be very careful about but if you look at the South Florida economy.
-- -- New York City economy the housing markets here are so strong because there's just a shrinking.
Inventory and as that inventory continues.
-- and no new inventory coming up it pushes property values.
You know and you're -- -- as -- thinking hey wait a second I thought we weren't as big.
You know -- huge housing crack up and all of a sudden we're in recovery mode.
I read a statement that's an analyst made about the case Shiller saying this is really important because gives a great perspective.
This person is a critic they're saying watch out for the housing numbers that are coming in.
Than -- -- data is distorted and skewed basically neighborhoods where sub prime lending was rampant.
And there was massive but foreclosures.
And now you see people coming in to buy those house that's doing that did -- -- existing a lot of price appreciation of course since 2006 in those areas.
After a really severe price declines so should we be -- this all in perspective above really happen in the housing market.
We should but one of the things that we need to look at at the median income price points is looking at rental rates rental rates have escalated over the past five years.
Rental rates for apartments have -- skyrocketed so now the delta between the cost of home ownership.
Vs the cost of renting -- equivalent and in some instances is that we now more expensive.
To rent than it is to buy and in those markets that's were -- seeing this.
Appreciation on in this shrinking inventory.
I think yeah I'm here to -- but you know that Europe they're saying wait a second should -- take advantage of the rates now.
Should go and head and botched what do you think -- -- -- because rates are not going to get any lower there essentially.
Zero interest rates today they're not gonna get any lower and housing prices are gonna move up.
And there may bear will be a minor correction in some markets but overall I think we're looking at the next five to seven years of constant.
Price appreciation on all sectors of the housing market in environments where the economies are healthy or in recovery.
I'm done isn't it true that you should be looking at markets -- -- strong blue chip companies.
Operating I -- that's really key right.
Absolutely where where the governments are pretty solvent.
Private sector is expanding and where the tax policy -- of Florida is going to do exceptionally well because also it's a zero.
Income tax environment.
And -- -- for New York for example where it's 14%.
You're gonna see more.
Of more fluid New Yorkers and entrepreneur -- are moving their business itself.
And then of course bringing employees with him and hiring usually those markets are gonna I think improved was well.
You know I don't know I just have to say to myself hey wait a second of Reno Air pocket in the housing market in other words of fed at some point.
Is going to see hate bond yields are rising meaning did mortgage.
Rates are tied to bond yields.
And that mortgage rates are gonna be going up and and that could be coming down upon us within the next year or so so should -- grab it now ahead of the interest.
I'm saying interest rates could be coming up with the next couple years.
I think you're right in the next couple years as.
The housing market and the economy continued to slow recovery.
I think ultimately we'll see rates go up and but not for the next year or so and I think now is the best time to be buying real estate.
And anyone who can especially renters should be looking to buy right.
-- there's another important piece of data that the -- it's now about that is of course if they.
That people who are on upside down in their mortgage -- other words there's about ten point 4000010 point six million people.
Tour in what's called negative equity meaning their mortgage is worth more than their house.
So there was a big fear we've been talking and Cuban sickness for three years now those people gonna flood into the market and basically -- housing prices to plummet.
But I think it but hey they're locked in their mortgage they can't get out of that mortgage so quickly right I mean that they have to stay in that mortgage.
I didn't -- so that's an African flooding into the market what do you think.
What -- of course I agree with -- -- -- and for that reason and also everybody who's upside down their mortgage doesn't wanna move doesn't need to move and other wanna sell.
And then also those numbers are shrinking each month as we see the housing market recover and values recover.
-- recoveries take place in those who -- upside down on their mortgages as well and done that's the best evidence of a solid real estate market.
Is people are still sticking with their mortgages that they're upside down and and pain.
And I don't wanna switch gears quickly final point all but there's been a criticism after now that that Democrat President Bill Clinton.
And other people in congress basically put in place a very dangerous Nassau housing policy.
And now we've got -- -- -- reserve coming to the rescue of a very dangerous economic policy that was enacted by Washington DC.
Many Democrats then -- what do you make of that.
While not sure that the democratic problem I do think that our economy.
It's far too dependent on the housing sector and that's unfortunate because we.
Have lost a lot of the to have that -- housing so to -- policy in place while they would I think it was still advised to have an economy.
Propped up by the housing sector and I didn't do it may have initiated with Clinton but certainly George W pushed down -- long throughout his presidency.
So the issue here is the the economy -- needs to be broader and we've all been talking about this now for quite awhile.
In terms of expanding our manufacturing businesses to being more competitive come as a country.
In terms of where we have jobs and to grow our jobs that the weakness of the current economy right now.
Are right mr.
The people's corporation chairman CEO so good to -- -- -- sir thank you so much for your time --