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Well straight at home prices into the Federal Reserve -- work some magic.
On those numbers in January home prices were up more than 8% from a year earlier the biggest increase we've seen since the summer of 06.
That according to vacation or home price index of twenty major cities.
Can you say housing -- Bob Hope.
Is that what Robert -- -- and Bob is here from New Haven, Connecticut is co author of the report and economics professor.
At Yale University.
Bob how much credit that we give to the Federal Reserve for these low interest rates and when you adjust for interest rates -- home prices even really gone up.
Well yeah that's -- good -- we have a government that is really behind the housing market.
With the Fed whether it's QE3.
With this a part of Fannie and Freddie.
That had a rough housing administration.
And we still have everything into the mortgage interest deduction.
-- government is gang busters go with the housing market.
And it what is actually doing since September is more or less flat but on a seasonally adjusted basis it's going up.
So that in some cities this looks like a bubble.
Overall it's that's been flat for a while.
-- a couple of things you said we still have yet to rescind the mortgage interest deduction do you expect that to happen.
In the near -- Well I don't know about the near term but it looks vulnerable to me at least for higher income people are higher priced homes.
So I think that you know they're they're going to be looking everywhere -- raise tax revenue and that seems to me like a likely place what -- that data home prices you thank.
It would at.
You know a lot of people don't even take the -- -- it's not as big as you might think but it is it is a it would be a hit on the house.
How could it not be at its taking money out of people who invest in homes.
Good point in you've mentioned -- areas said one of course that jumps out -- you've mentioned before is Phoenix.
The year earlier price increase there up more than 23%.
Now made the laugh but.
I mean how much of a calm down will we see and some of these areas and which ones that make you the most nervous.
Is still down 44%.
From its peak in real invasion directed times more than -- half more than 50%.
Vegas is down over 60% in real terms.
There they're coming back whether they're going back into another boom like that we saw recently I have I'm skeptical about that.
In some of these areas Bob what you're saying and -- named Miami and the parts of Florida as one.
People are trading real estate as a bond alternative and I want to know how interest we can talk about the credit risk.
In these properties but how interest rates sensitive.
Are these properties going to be if -- you know it's right starts climbing in a big way.
Yeah it's kind of remarkable that the housing market hasn't strengthen mar with really record low long term interest rates -- in the past few years.
People are still skeptical you know they're not.
-- enthusiastic like they were ten years ago about housing investments but even with all this.
Benefit a very low interest rates they're still not.
The wildly enthusiastic about home prices and interest rates are going to go up they're not gonna stay at record lows forever.
With so how much of how much did you expect to lose if interest rates went out.
Two percentage points.
That's sound like -- likely increase.
How much would you expect to lose at all -- it's hard to forget these markets.
But I still worry about home price to -- I like the last guy still worrying about credit.
They're going up solidly right now and I -- a year from now they'll be substantially higher than they are now.
But this this looks a little bit to me like the boom that was created by the home buyer tax credit remember in 2009 -- -- -- created this.
Boone boon for new homebuyers.
And that lasted that created a boom but then it fizzled when they took it off.
So we've got another government program like that.
So I still wary about the longer run and I think that home prices might be lower than there are now in the few years I will not that's not a forecast it's a worry.
-- I -- really quickly and that's in page 500 close to its record close homes -- stocks if you had to pick one which -- -- news.
But depends depends on your circumstances obviously.
-- -- stock still work there a little bit overpriced but now that I'm more bullish on them are right Bob has good to see was always against the -- dancer with that -- -- -- a little bit though LA India.
-- -- -- Different and I had to be well.
-- -- -- -- stocks like that many gave the answer which is always nice I guess that answers the questions would you ever asked them to the -- that's always against.
I -- I reckless -- how.
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