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>> >>PEGGY PICO: DATA QUICK REPORT AS SLIGHT DIP IN THE MEDIUM HOME PRICE FROM 417,000
TO 415,000 DOLLARS AT THE SAME TIME, HOME SALES DROPPED IN J.
AND CHANGES TO FEDERALLY BACKED HOME LOANS COULD MAKE IT HARDER FOR BUYERS.
HERE TO PUT THE SITUATION IN CONTEXT ARE MICHAEL LEA, WITH CORKY MCMILLIN REAL ESTATE, AND
ECONOMIST GARY LONDON, WITH THE LONDON GROUP REALTY ADVISERS.
MICHAEL, LET'S START WITH YOU. EVEN THOUGH HOME PRICES WERE SLIGHTLY LOWER
IN JULY, THEY'RE STILL HIGHER IN SALES THAN THEY WERE LAST YEAR.
DOES THIS MEAN THE HOUSING MARKET IS WHERE IT SHOULD BE?
>> >>DR. MICHAEL LEA: I THINK WE'VE HAD AN UNUSUAL HOUSING MARKET, AND I THINK WE'RE
STARTING TO SEE A RETURN TO A MORE NORMAL LEVEL OF PRICE INCREASE AS WELL AS SUPPLY.
>> >>PEGGY PICO: AND GARY, WITH HOUSING PRICES AND INTEREST RATES RISING, WHO ARE THE TIP
DL BUYERS AND SELLERS NOW AS OPPOSED TO BE BEFORE.
>> >>GARY LONDON: BEFORE THEY WERE STRESS BUYERS AND CASH BUYERS, AND SELLERS WHO ARE
DISTRESSED SELLERS ARE PEOPLE WHO COULD SELL. NOW WE'RE SEEING A FUNCTIONAL TRANSITION IN
THE MARKET PLACE WHERE WE'RE SEEING MORE VIABLE BUYERS AND SELLERS START TO PARTICIPATE AGAIN.
AND THIS IS WHY YOU'VE SEEN SUCH A SIGNIFICANT INCREASE IN HOUSING VALUES OVER THE PAST YEAR.
>> >>PEGGY PICO: WHEN YOU'RE TALKING ABOUT THE BUYERS YOU WERE SAYING DISTRESSED DO YOU
MEAN INVESTORS OR FIRST TIME HOME BUYERS THAT FELTED THEY HAD TO GET IN WHEN THE PRICES
WERE LOW? >> >>GARY LONDON: THERE'S BEEN SOME FIRST
TIME OR REPEATING HOME BUYERS TO GET INTO THE MARKET PLACE, AND THEY WERE SMART TO HAVE
DONE IT. I'M TALKING ABOUT PEOPLE WHO WERE TAKING ADVANTAGE
OF THE LOW PRICES AND INVESTING. >> >>PEGGY PICO: MICHAEL, THERE ARE SOME CHANGES
FROM THE FEDERALLY BACKED LOANS, WHAT ARE SOME OF THOSE CHANGES AND HOW COULD THEY IMPACT
BUYERS HERE? >> >>DR. MICHAEL LEA: THE SHORT TERM, I THINK
WE'RE GOING TO SEE A REDUCTION IN THE LOAN LIMITS WHICH ARE THE ACTUAL LOAN SIZE ***
MAY AND FREDDIE MAC CAN PURCHASE. THAT'S PROBABLY GOING TO LEAD TO A SLIGHT
INCREASE IN MORTGAGE RATES BECAUSE PEOPLE WILL HAVE TO GET SO CALLED JUMBO LOANS WHICH
ARE SLIGHTLY HIGHER RATES THAN THOSE BACKED BY THE GOVERNMENT.
>> >>PEGGY PICO: AND THAT'S GOING TO START IN JANUARY; RIGHT?
>> >>DR. MICHAEL LEA: THAT'S GOING TO HAPPEN AT THE BEGINNING OF THE YEAR.
>> >>: THESE CHANGE WHAT ELSE F ANYTHING, CAN WE EXPECT TO SEE?
>> >>DR. MICHAEL LEA: THERE ARE REFORM PROPOSALS FOR DEALING WITH *** MAY AND FREDDIE MAC
IN CONGRESS RIGHT NOW. THEY RANGE FROM A HOUSE PROPOSAL WHICH WOULD
ELIMINATE THEM, AND ELIMINATE MOST OF THE GOVERNMENT INVOLVEMENT IN THE MORTGAGE DEPARTMENT,
TO A MORE MODERATE APPROACH TO THE SENATE, WHICH WOULD NOT HAVE *** MAY AND FREDDIE
MAC, BUT WOULD HAVE A GOVERNMENT GUARANTEE AGENCY THAT WOULD BACK THOSE LOANS.
>> >>PEGGY PICO: SO MAYBE NEW HOME OWNERS SHOULD BE WATCHING THIS.
>> >>DR. MICHAEL LEA: RATES ARE GOING TO BE RISING REGARDLESS OF THE TYPE OF CHANGE THAT
OCCURS. >> >>PEGGY PICO: SPEAKING ABOUT CHANGE, I
KNOW GARY ONE OF GOOD INDICATOR THE HEALTH OF A NEW REAL ESTATE MARKET IS HOME CONSTRUCTION.
WHERE DO WE STABBED ON THAT IN SAN DIEGO? >> >>GARY LONDON: WE'RE AT A RECORD LOW SITUATION
STILL. WE'RE UP A LITTLE BIT FROM THE RECESSIONARY
YEARS, BUT NOT NEARLY AT THE LEVEL WE NEED REPLACE TO MEET THE DEMAND IN THE MARKET PLACE.
THAT'S A PERPETUAL SITUATION. WE'RE NEVER GOING TO MEET THE DEMAND IN THE
MARKET SO WE CAN CONTINUE TO SEE PRESSURE TO OF RISING HOUSING PRICES.
>> >>PEGGY PICO: HOW COME YOU DON'T THINK HERE WE WOULD SEE THE NEW HOME CONSTRUCTION?
IS IT WE'RE SEEING OTHER TYPES, CONDOS, APARTMENTS? OR IS IT SOMETHING SPECIFIC TO SAN DIEGO?
>> >>GARY LONDON: IT'S NOT SPECIFIC TO SAN DIEGO, IT'S SPECIFIC CERTAINLY TO THE WEST
COAST. THE ULTIMATE REASON IS WE'VE RUN OUT OF LAND
IN SAN DIEGO, AND WE'RE NOW STARTING TO BUILD UPWARDS.
WE USED TO BE ABLE TO BUILD OUT. WE'RE OUT OF GREEN PROPERTY AND ARE NOW STARTING
TO SEE MORE VERTICAL DEVELOPMENT. A LOT LESS SINGLE FAMILY HOMES.
>> >>PEGGY PICO: AND MICHAEL, WHAT WOULD BE YOUR BEST ADVICE FOR HOME BUYERS RIGHT NOW?
>> >>DR. MICHAEL LEA: I THINK THIS IS A GOOD TIME TO GET INTO THE MARKET.
I THINK THAT INTEREST RATES ARE GOING TO BE RISING, AND HOUSE PRICES WILL CONTINUE TO
RISE AT A SLOWER PACE. I THINK THIS IS A GOOD TIME TO BUY.
>> >>PEGGY PICO: GARY, HOW ABOUT YOU FOR WHY DON'T WE SAY SELLERS RIGHT NOW?
>> >>GARY LONDON: I THINK YOUR GOING TO SEE MORE AND MORE SELLERS GET INTO THE MARKET
PLACE AS VALUES OF HOUSING RISE, YOU'RE GOING TO SEE LESS UNDER WATER SITUATIONS AND MORE
PEOPLE HAVING STH ABILITY TO ACTUALLY SELL. THE FACT THAT WE HAVE WHATEVER PACE OF INCREASE
OF INTEREST RATES PROBABLY ISN'T GOING TO BE SUCH A BAD THING BECAUSE THAT MEANS THAT
LENDERS ARE ALSO GOING TO BE MORE ACTIVE IN BEING ABLE TO LOAN TO THESE PEOPLE.
>> >>PEGGY PICO: SHOULD THEY SELL OR WAIT? STIRKS I WOULD SAY WAITING CAN'T HURT.
BUT YOU'LL SEE MORE AND MORE PEOPLE IN THE MARKET.
>> >>PEGGY PICO: THANK YOU SO MUCH FOR THIS UPDATE.