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A 151000 dollar tax credit for new homebuyers and guaranteed 4% mortgage rates as two of the proposals for growing the stimulus plan helping out housing but -- they really.
Help Richard Smith CEO of really G which is the parent company of well -- when he wanted -- banker among others so we welcome you to the program thanks for coming on.
I -- getting harder are these Richard good good idea that you know I would imagine that -- but the real thing businessmen say they are but are they unfair.
Well if you're absolutely there was some history as the best teacher.
We can't ignore.
Very similar set of circumstances that occurred 1970.
In the midst of a very deep recession or about six consecutive quarters of job loss and economic loss.
The congress reacted much in the way we are suggesting today -- enacted a tax credit which was.
About 2000 dollars and and adjusted basis it's about 121000 dollars today.
They do that initially and it failed to stimulate housing.
They waited several months and then they took interest rates from 9% to seven and a half.
And housing took off we are out of the recession we're in less than a year or so aren't history's great -- to work then -- work today.
Richard but interest rates mortgage rates in particular.
Have been coming down as the housing market has been collapsing is this really a function of confidence where people think.
That home prices are gonna continue to fall there's not that no incentive that'll get them to -- No we don't think so at all in fact when -- we reduced to about four point eight this of the thirty year conventional.
Then reacted and primarily because of that it was buying mortgage backed securities that market is very -- -- jump back damaged they announced -- buying up 500 billion in mortgage backed securities about about eighty billion.
It took great -- -- rather dramatically and we didn't back in the entire industry's solid base a slight jump in -- and housing contracts in reaction to that.
They stopped by mortgage backed securities the thirty year fixed jump back up to about five point five and helping slowed so but in the markets reacting to this I don't see anything different.
About this then taking the Fed fund rate to 1% you're making.
You're making -- -- very convenient platform for the private sector to react to and that's offices were suggesting lower rates stimulate the short term.
Buyers who were sitting on the sidelines to jump back into the market stimulate the economy put people back to work and where.
We're confident that that that that that is exactly what would occur it.
Really don't think you know I think you're probably right Richard that and that's what would occur because you need to bring it -- we talked about yesterday you need to bring in quote the money people people of good credit.
And money to stimulate the economy.
I would argue though that for real -- and suddenly you're employees.
It's illegal wars long term thing that ever happened because now I got a nation of people -- -- afford a half from bought a house afford half got a tax credit those people will never move again.
-- you have a three or five year housing boom and then nothing for twenty.
Members of their -- -- and you assume that the population static it's not every voice and another was four years ago -- Not really every year you have the -- -- job growth household formation death divorce -- -- that look at look at the past year.
The worst housing -- on record and we still sold.
What four point seven million homes that's that's that's what it takes to keep housing in this country going it's a fundamental aspect of -- And there -- there will continue to be trading in housing because it's -- whether it's a 4% wasn't.
About 30% of the homes out there are mortgage rate they continue to trade matches the nature of the business and always will be.
But how -- our prices are still not super cheap here Richard.
How much more to housing you -- don't home prices still need to collect here.
Well they've they're about to put down -- -- 2.3 percent peak to trough so that's the case Shiller report and in some markets as more some markets plus.
It really depends on whether market was prompted to begin -- -- -- -- the -- you had very -- substantial run -- prize so you've had very substantial corrections.
In the breadbasket of the country the midwest you didn't have the grownups you had the traditional 45%.
Annual increase in the median sales price and -- -- corrected modestly better not go to -- they did they don't need to correct much.
It's the coast -- better correct it in fact they've been correcting rather well and the values today are terrific this is that.
That the National Association of Realtors since they started collecting this data back and I.
Okay it Richard you know we when he Internet bubble burst we had a lot of lawsuits against it and listen to brokers and traders have sold the shares the banks are being killed now being sued for giving out sub prime loans -- -- didn't deserve it.
Do the realtors play any or have any liability in the housing boom of the middle of it at the front line of this market.
Do they have any liability it all for selling homes that many of them probably suspected were overpriced.
Well I'm not a court I can make that judgment I would say absolutely not mean that we no one was forced -- -- yourselves.
Where the agency and we represented brought a different parties sit at a table listen this is the simple fact is that these lenders.
Were not underwriting their loans correctly they know that now of these were LT -- 100% LTV -- if you could -- and walk Q were you were given.
Why don't they don't you bear some responsibility.
Richard for encouraging people are helping.
Promote the idea that home prices go up for -- -- I know that a lot of blame to go round but that's what got us ended this.
-- -- -- a low prices would never fall.
Well remember -- ever have fallen until they have -- all NATO.
Now right but it prior to that there is not a recorded year in history.
When records were kept that the there was a year over year price declines so there's nothing in the -- that would suggested that this was going to happen.
There's nothing that day that would suggest that we would've had -- credit collapse of all these other issues we're facing so.
This is not foreseeable yeah I guess I guess is CR.
Point there -- like you say you set a record realtors sold a house a -- defeat from the seller then maybe that person you buyer but that a foreclosure.
And maybe they use the same it seems like.
The real thing they're making their five and 6% which is about 4% more they make any place else in the world.
Trading the same homes over and over again I mean at some point the women and at the front lines have got up.
Big -- a -- is going to be should show all of them know.
-- Know that -- we would agree with that at all and I don't think there's anything anybody can suggest that there is anybody setting a table.
Who played any role that was inappropriate.
Remember people work I -- Challenge OK I'll put it they get OK I'm not listen Richard -- that will debate you on this we.
We know the president I will challenge our viewers to send me an email on any real to that ever told them hey you might want to hold -- by the south from the market may go down.
You do you believe the realtors said that at any point the last five years.
Assurant surely I hope I hope you'll -- you know it's all driven by the market not driven by just the individual circumstances of course.
You know Rick Richard Lewis and I hope you're right there's a lot of good women admit that -- that industry and -- try to make a living I mean but.
You know it or to -- -- 6% on home to be should should they should that come down to go to two -- 3% like Europe.
You know it's not 6% it's the average is around five and it's only on one side of the transaction remember -- -- The broker on the buy side yourself side so they actually share of that.
In Europe by the way is not a two or 3% Europe -- an individual markets -- markets in Europe that are -- -- five and six just like we are.
Well Richard Smith CO really you Richard -- I appreciate debating on this tough topic I mean we've been tough on every industry has been involved so I don't think the real -- -- escape to the scrutiny as well.
It's our pleasure we appreciate -- --
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