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MBS Managing Partner David Lykken and Prudential Douglas Elliman Vice Chair Dolly Lenz on the state of the housing market.
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-- stocks -- housing is rolling that -- are not disconnected just take a look at this chart and you'll know they've tracked each other pretty well for the past decade so as the doors Dow soars to its highest level ever today.
Can we learn more about home prices and whether they'll keep climbing because they've been working nicely and then.
But my next guests are worried we could be looking at another housing bubble.
Which.
Look forward to question this latest down record they're real estate experts -- lands and David likened to only view firstly.
Yeah I definitely think we could have a bubble brewing as they say.
Investors are chasing yield.
So they're buying all these houses right there's no yield in treasuries is no yield anywhere else they're buying houses to rent out it's not end users that are causing this.
Price increase but -- swayed by.
Where you work.
You -- -- one of the highest priced in most lucrative markets in the world is across the country and even leave it yes absolutely and yet even hedge funds are in the game now they're buying tons -- -- -- -- Pseudo executives this is all driven by essentially fat cats and not average.
Chosen Joseph ends buying a little houses and and and on up.
Wouldn't it and pet that's absolutely the case deal I was at a meeting I'll leave now that's good I just wanted to confirm but many more mortgages -- it right there and nobody is taking a more let me down -- yet but David would be comfortable -- -- date.
-- -- -- The reality is out of that meeting here and he out Austin, Texas I'm up in natural the David I was an Oscar we brought all these hedge funds to gather.
And there's billions of dollars still waiting to get on the market -- and so they're looking at this but we're sitting at a bit of a bubble especially look at -- federal government.
Is financing with eighty Freddie -- and Hud.
97% of all the loans.
That's that's just one of those situations -- got to make people nervous when the government that deep in our housing industry.
-- but something got these guys off the dime -- -- -- to move these numbers a little bit are you saying that's -- While this thing that got them off the dime is interest rates right interest rates interest rates have been low -- Yet their low forever and they have nowhere to get yield so they're saying elements like Kasich McCain -- changed now the prices went all the way down -- -- process is starting to be cleared out -- That's -- -- ballistic yeah.
That it well but it's not necessarily bullish signal if it's investors buying at all not end users because the minute interest rates go up what -- -- is gonna happen.
Investors are gonna -- when investors -- we're gonna go like this again.
That's that's what -- On another housing exactly yeah did you see that happening as -- I can see that definitely that's an area could actually play out and I think another factor that's really playing into this is we're now having the federal.
Government through the Consumer Financial Protection Bureau start introducing.
New regulations -- that is gonna can further constrict financing for the ones.
That Dolly and I both agree need to get back in the market and that's that first time home buyer the consumers and not investors.
And help -- information issue is an issue right I know more -- wolf you know.
Kids my kids -- -- living with their parents they have no jobs they cannot afford to go on their own without family formation who is the end user buying a house so.
-- -- brother's reports that sells are up albeit under some cost constraints that it it it or not it's big news profits of thousands but they're selling homes.
What does that tell.
Almost of the few buyers that actually are out there there are few buyers out there there are some who argue -- more than -- were before.
No because I think at least 40% of the market is investors so absolutely and the investors are not buyers in my mind I.
Here's a -- -- because if you're both right -- your experts in -- feel what I'm trying he says that mine.
How to stop eroding in value and and become essentially the worth of the -- -- drive through obviously you're not helping me without arguments -- -- where do we go from here what happens.
Well I think the reality is as if we watch interest rates tick up in any way shape performance gonna really put -- it's an athlete in any kind of housing recovery that we have -- you don't think you can get people off the fence to say -- the party's over we don't just now there's there's got enough confidence in the market right now near you look at the overall economic.
The numbers you look at that consumer confidence numbers there's just too many factors that are saying were not ready to dive into and out of there said the same about the stock market do all these negatives -- decline that -- -- Yeah -- the black market completely different the stock market -- I think these two or more enjoyment.
What they're they're joined -- in the sense that one is good impact housing is gonna impact on Paula.
That this stock market down no question about that but one thing is buying a long term -- and holding it for potentially -- a thirty year mortgage on it.
And getting trapped -- it vs taking a position selling out of stock it's not the same gonna come to the trade out.
That's right it's very different.
One is -- one has not.
-- OUN and condescending face to just give them.
And friends are gonna -- one -- -- -- you know positive and I think -- That's fine Dolly today enjoyed your last visit with the bigger.
Given its -- -- -- with the device is only you're below the wrong and we wrote wrong but you've been on which probably until then Ontario and W one -- in part always come back.
