>> I CAN'T TELL YOU WHERE
INTEREST RATES ARE GOING BUT I
CAN SHOW YOU WHERE THEY HAVE
BEEN COMING FROM, WHICH IS, A
LOW-LEVEL TO A HIGHER LEVEL N
LAST THREE WEEKS WE'VE HAD A
SUBSTANTIAL RISE IN INTEREST
RATES.
THEY'VE GONE FROM $3.75% TO
4.5%.
SEE HOW STEEPLY THE PINK LINE
HAS GONE UP.
THAT'S THE FASTEST INCREASE IN
MORTGAGE RATES SINCE 1987.
THEY'RE STILL AT A LOW LEVEL
COMPARED TO WHERE THEY WERE
BEFORE THE FINANCIAL CRISIS, BUT
THEY ARE STILL TRENDING UP AND
THIS IS ALL A PART OF THE
INFLATIONARY PRESSURES WE'RE
FEELING, THE FED HAVING TO RAISE
INTEREST RATES, AND ALL OF THAT
IS OBVIOUSLY NOT GOOD FOR PEOPLE
WHO ARE TRYING TO BUY OR
REFINANCE THE HOUSE.
IF YOU BOUGHT A TYPICAL $350,000
HOUSE, YOUR INTEREST RATE
PAYMENTS WOULD GO FROM $1,180 TO
$2400 A MONTH ON THE THREE-WEEK
INCREASE IN INTEREST RATES.
WE CAN TURN TO THE HOUSING
MARKET, IF YOU'RE TRYING TO BUY
A HOUSE, LIFE IS NOT BETTER FOR
YOU.
YOU CAN SEE ON THE LEFT HOUSE
PRICES AFTER HAVING REMAINED
QUITE STABLE FOR A GOOD WHILE,
HAVE SHOT UP.
WE JUST HAD A REPORT THIS WEEK,
THEY'RE UP 19% YEAR OVER YEAR,
AND THEY WERE UP 11% LAST YEAR.
YOU PUT THAT TOGETHER THE
AVERAGE PRICE IN THIS COUNTRY
HAS GONE FROM $270,000 TO
$350,000, IN JUST THE LAST TWO
YEARS.
IF YOU LOOK APT --
>> CAN I ASK YOU ABOUT THAT,
STEVE.
>> SURE.
>> IT WAS EARLY ON WHEN THE
HOUSING MARKET GOT SO HOT A LOT
OF PEOPLE, MYSELF INCLUDED, WERE
SAYING THIS REMINDS ME OF 2007,
GOING INTO 2008, EVERYBODY WAS
BUYING NEW HOUSES, EVERYBODY WAS
BUYING A SECOND HOUSE A CONDO,
EXTENSIONS ON THEIR KITCHENS.
YOU AND MANY OTHER PEOPLE
POINTED OUT, THIS IS CASH.
LIKE PEOPLE AREN'T EXTENDING
THEMSELVES AS YOU'VE ALWAYS SAID
$2 TRILLION PLACED ON THE
SIDELINES DURING COVID, PEOPLE
HAVE A LOT OF MONEY TO SPEND.
MY QUESTION IS, EVEN WITH
INTEREST RATES GOING UP, DO WE
EXPECT THIS HOUSING MARKET TO --
WHEN IS IT GOING TO COOL DOWN
AND WHEN IS THERE GOING TO BE
SORT OF A RETURN TO NORMAL FOR
HOUSING?
>> NOT SOON, JOE, BECAUSE YOUR
POINT IS RIGHT THERE IS A LOT OF
CASH STILL ON THE SIDELINES.
WE HAVE A REAL SHORTAGE OF
HOUSING IN THIS COUNTRY.
WHAT HAPPENED AFTER 2008 WAS
THAT WE SIMPLY DIDN'T BUILD
ENOUGH HOUSES FOR A LONG TIME
AND THE HOUSING INDUSTRY WAS ON
ITS BUTT, FRANKLY.
WE ARE BY MOST ESTIMATES 3 TO 4
MILLION HOUSES SHORT IN THIS
COUNTRY AND AS LONG AS PEOPLE
HAVE THE MONEY, AS WE TALKED
ABOUT THEY DO, AS LONG AS
INTEREST RATES STAY LOW, WHICH
AT THE MOMENT THEY STILL ARE,
PEOPLE ARE GOING TO KEEP BUYING
HOUSES.
I'M GOING TO SHOW YOU IN A
SECOND AMAZING STATISTICS ON
THAT.
IN TERMS OF -- CAN WE JUST GO
BACK.
OKAY.
WANT TO GO THERE.
I WAS GOING TO GO BACK ONE AND
SHOW YOU THE NUMBER OF HOMES FOR
SALE IS AT AN ALL-TIME LOW AND
HALF OF ALL HOUSES SOLD TODAY
ARE SOLD ABOVE THE ASKING PRICE.
LOOK, EVEN IF YOU'RE NOT A HOME
BUYER, A HOME RENTER, LIFE IS
NOT SO GREAT FOR YOU.
A THIRD OF THE COUNTRY ARE HOME
RENTERS AND WE'VE HAD THIS
ENORMOUS ESCALATION IN RENTAL
PRICES.
FOR A LONG TIME THEY WERE STABLE
GOING UP AT 4% A YEAR.
BUT NOW THEY'RE GOING UP AT 15%
A YEAR.
LIFE IS NOT SO MUCH BETTER IF
YOU'RE A BETTER.
YOUR RENT HAS GONE FROM ROUGHLY
$1600 A MONTH TO $1900 A MONTH.
SO SURE, THERE ARE PEOPLE WHO
OWN HOUSES.
YOU'RE IN GOOD SHAPE.
PEOPLE WHO WANT TO SELL HOUSES,
YOU'RE IN GOOD SHAPE.
PEOPLE GOING INTO THE HOUSING
MARKET OR WANT TO GET ANOTHER
HOUSE, YOU'RE GOING TO PAY A LOT
MORE BOTH FOR THE HOUSE, THE
MORTGAGE AND IF YOU'RE A RENTER
FOR THAT RENTAL APARTMENT.
>> IS THAT EVER GOING TO
STABILIZE OR GO BACK DOWN, STEVE
IN.
>> AT SOME POINT, SURE.
THIS ALL MOVES IN CYCLES AND
WE'RE IN AN INFLECTION POINT.
YOU HAVE INTEREST RATES GOING
UP, WHICH WOULD USUALLY BRING
HOUSE PRICES DOWN OR KEEP THEM
FROM GOING UP SO MUCH, BUT AS
JOE POINTED OUT YOU HAVE A LOT
OF CASH ON THE SIDELINES AND TRZ
ARE STILL RELATIVELY LOW
COMPARED TO HISTORY, SO THAT'S
NOT GOING TO HAPPEN FOR A WHILE.
WE HAVE THIS HOUSING SHORTAGE,
AND YES, HOME BUILDING HAS
PICKED UP, BUT SO HAS THE COST
OF BUILDING A HOUSE.
YOU'VE HAD THESE ENORMOUS
INCREASES IN LUMBER PRICES,
COPPER PRICES FOR YOUR
ELECTRICAL WIRES AND PLUMBING,
SO HOUSE PRICES ARE GOING TO
CONTINUE TO GO UP.
WHEN YOU LOOK AT THE POLLS ABOUT
PEOPLE'S -- HOW THEY FEEL ABOUT
THEIR FINANCIAL SITUATION, IT'S
OBVIOUSLY NOT GOOD.
THE POLLS ON THE ECONOMY, ON
THEIR OWN PERSONAL FINANCIAL
SITUATION HAVE GOTTEN WORSE AND
THIS HOUSING SITUATION NO DOUBT,