Pinto: Don’t Confuse Recovery With Government-Goosed Market

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Steven is alert for -- existing home sales edging up slightly in January as the supply of homes for sale.

Fell to a thirteen year low had been -- the American Enterprise Institute -- years ahead sales dropped supplies are tight prices are climbing.

What is not to get excited about.

But big -- that -- important not to confuse a yet recovery.

With a market that the government is -- seeing constantly.

I mean is that the government is still.

Weighing -- this market they guarantee 90% of all credit.

Half of all the borrowers -- get mortgages with down payments around the zero we have interest rates at the lowest level in a hundred years.

And the Fed is the world's largest buyer of mortgage debt that is not a normal.

Market yes there's recovery.

But don't confuse it with -- a fundamental recovery.

But if you think that what the Federal Reserve is doing is building inflation.

It so why wouldn't you wanna buy a house you take out a fixed rate mortgage.

-- to -- an asset with very little money down that's going to -- because of what the Fed is doing that sounds like -- winning situation why isn't that.

-- it's it's that sounds like a winning situation but what happens when the interest rates inevitably have to go up.

It today there -- three and a half if they went up to six or 7% which.

Historically would still be a very low interest rates all of a sudden the things turn around the other problem is what the Fed is doing.

Is really encouraging a lot of capital investment in real estate.

But it's kind of the wrong kind of capital it's not going in for long term fundamental investment in.

Credit enhancement and things like that that the market really needs to replace Fannie Freddie and FHA it's going in for rent by -- rent.

And that capital is short term horizon it's looking for getting out in three or four years.

And if that this market that have runs into a problem with a recession for higher interest rates are both.

Than that Mac Apple's gonna fully.

And all of a sudden these areas that are getting -- on the upside are gonna have a big vacuum on the downside it it's amazing today.

We're still running at about 40%.

Of all of the purchases are either invest -- Or vacation my homes second homes about monetize it wasn't 2005.

A lot of farm -- said what are you suggesting that this.

This -- this -- we've gotten housing is fleeting and if you're a real serious buyer who just needs to buy a home delivered -- the people should wait another three to five years.

I think what you look at is what does it cost to -- And then you try to take -- a shorter term mortgage in an accumulate some.

Equity through shorter term amortization and and and then you're covered both ways if the house price goes up -- winner house prices go down you still -- accumulated equity the old fashioned way you pay down your mortgage.

-- -- to -- thank you star Ed Pinto at the American Enterprise Institute thanks day against then.

We're gonna talk coming up.

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Pinto: Don’t Confuse Recovery With Government-Goosed Market

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