Also in this playlist...
This transcript is automatically generated
Small home sales numbers let's bring in Ron -- TA chairman and CEO of home services of America.
One of the largest real estate brokerage firms in the country also -- by Berkshire Hathaway he's in Minneapolis Ron always great to see you.
Wish the news with a little bit better.
About how people feel about homes do you worry that the perception.
Of the value of -- home has changed so much.
In the last year so that there might be many more dismal months to com.
Well good morning day again you know that said it's a great question I would say that people have to do re calibrate their expectations.
When compared against the last fifteen years.
Where homeownership was.
Appreciating in many cases at high single digit or double digits and now.
We're seeing -- you know price destruction over the last three years and you know the sad thing is.
A lot of people can no longer look at their home as an automatic.
Wealth builder we've seen six trillion dollars of wealth in homeownership destroyed in the last few years.
But homeownership is still a very very desirable activity and out you know we saw this this said -- coming.
You know as operators were able to monitor the pending sales activity.
Post tax credit we saw sales drop.
Twenty to 30%.
Across the country may June and July so this is not unexpected for us.
Now you say homeownership is still a desirable activity I know there was some sort of a drop that was expected.
But still why aren't more people buying homes and you look at the regional breakdown that -- -- -- -- a moment ago -- -- down all across the country.
Interest rates you're not gonna get much better than this right mean what's the mindset of the American home buyer if he -- she is not they're buying a home now when will they buy.
-- -- -- I would say -- -- this is a story of good news bad news if you're a buyer.
As Lawrence indicated it clearly there is some tremendous.
Upside interest rates are at an all time lull affordability.
-- -- all time high.
Plenty of inventory.
Home prices are currently at about 2002 level so it's it's a great time to buy.
You know why the car balancing the story of an about it as well -- the recent said that that there's there's probably two basic reasons.
You know people do not make a major asset purchase if they don't feel good about their employment.
And they don't feel about good about the economy you know I disagree with Lawrence perspective by I'm not seeing employment improving I see unemployment continuing to be a huge issue.
And secondarily it's consumer confidence consumer confidence is bouncing on the bottom.
And those are the two big drivers for people to make a business decision I think if we saw those.
Even in shots slightly we would see people moving back into the market but finally I think this very very low number.
Is a reflection of people buying -- word.
The -- the first four months of this year and now you know we we basically are picking up.
-- -- -- but what about the pressure of shadow inventory of upcoming inventory out look at the inventory numbers in this report.
Up to twelve and a half months supply.
And with one quarter of people with mortgages -- own homes with dozens -- those homes being underwater what are you seeing in and potentially.
Putting greater pressure on prices in the months to come.
While that -- and that that is exactly the case you know we are seeing in excess of 30%.
Of the sales being distress related.
And these are sellers that are forced to sell or they've already been foreclosed on.
And that's so it is going to put pressure on downward pressure on home values.
And it is very very difficult in this economy with prices going down many people being leveraged with today -- in their mortgage.
And that they're having to -- the closing with a check in him that's a tough sale.
Really quickly Ron how long do you think it will take the government to extract itself.
If indeed they make that decision from Fannie Mae and Freddie Mac.
Well I can't believe that it can be.
Quick extraction there's too much at stake and there's you know we have down.
-- in no condition to be able to have access to the mortgage markets with that the insurance in the guarantees for.
You know a long time twenty plus years I I think that it would have to be a gradual.
Retraction and this you know it.
Escape and I think that we're gonna see Freddie and Fannie in some fashion for the next several years as we come up with a new system.
Ron great to see you as always -- help -- that chairman and CEO of home services of America part of Berkshire Hathaway take care.
Filter by section